A study on Philippine monetary and banking policies (original) (raw)

External factors and Philippine monetary policy

2011

Therefore, while financial integration adds momentum to growth and development, it also makes the domestic financial landscape more vulnerable to a wide range of external shocks, thereby complicating the task of formulating appropriate monetary policy. Moreover, the increased integration of financial systems across the global economy has reshaped monetary policy frameworks and transmission channels. The aftermath of the crisis. The recent global financial crisis has presented new challenges to central banking. Financial fragility, brought about by poor regulation and not by loose monetary policy (Svensson (2010)), played a defining role in the origin and magnitude of the global financial crisis. As a consequence, the crisis has provoked debate about the central bank’s primary objective of price stability. It has also raised concerns that traditional central bank tools may no longer be as effective given the broader and more complex nature of financial systems. Role of external shock...

(DP 1991-06) Towards a More Open Philippines: Monetary and Exchange Rate Policy

2010

The Philippines has never had a structural experience in export development. Instead of fully departing from protection and import-substitution, export policies were placed on top of existing biases and the country ended up achieving neither export-orientation nor efficient import-substitution. The paper explores two major forces to export promotion. One is exhange rate. It is argued that it is a policy tool available in active export promotion. The experiences of other countries (to which the Philippines has been historically comparable) show how important exchange rate has been. The other is monetary policy. Access to domestic and foreign credits, cost of money and financing availability for exporters are discussed. It is argued that exports should be allowed access to financing from global financial markets. There is something to be said for an Exim-bank for the Philippines whose special effort is putting to bear its resources-financial, technical - into export development. Some ...

Chapter 5 REVISITING THE TRANSMISSION MECHANISMS OF MONETARY POLICY IN THE PHILIPPINES By

2016

The central banks of industrial and emerging market economies face the challenge of implementing monetary policy in an ever-changing economic environment. The emergence of more globally integrated financial systems, the liberalization of capital accounts, greater exchange rate flexibility, and the introduction of increasingly sophisticated products tested the ability of monetary policy and efficacy of financial regulations. Amidst these changes, central banking in the Philippines has also substantially evolved. It is not remote, therefore, that the traditional transmission mechanisms of monetary policy could have also undergone changes alongside structural transformation and policy regime shifts.

Macroeconomic Policy Regimes in the Philippines

Macroeconomic policy regimes in the Philippines The Philippines has undergone several economic regimes since it regained independence in 1946. These have been the causes and, sometimes, the consequences of varied (and, sometimes, volatile) economic policy episodes throughout that period. The sum of these growth episodes and their macroeconomic manifestations describe the development of the Philippine economy since the Second World War. The characterization of those regimes and their attendant economic developments provide a rich backdrop for learning the lessons of applied macroeconomic policies for the country. In this paper, we review the economic regimes and episodes starting from the late 1940's to the first decade of the new millennium. We end with some statistical tests that indicate the macroeconomic impact of the policies undertaken and important lessons for macroeconomic management. 1950's: maintenance of exchange rate Before the Second World War the Philippines was still a colony of the United States and its monetary system was a currency board administered by the largest bank in the country, the Philippine National Bank that exchanged foreign currency at the rate of Php 2:1 USD. After regaining independence, the country maintained the prewar rate to follow the stipulation of an agreement (Bell Trade Act, 1946) between the United States and the Philippines just before the return of independence. However, even after the Philippine Central Bank was set up in 1949 and even after the agreement lapsed in 1956; the central bank continued fixing the exchange rate at that level 1. Currency controls were instituted and foreign exchange trading was done through the central bank which allocated the available supply according to a 5-classification system that inadvertently favored the production of luxury consumption goods, among others. Monetary and other macroeconomic policies were adjusted to try to maintain the exchange rate. Monetary policy was kept tight and stringent fiscal controls were in 1 Years later, around 1970 in a lecture that the author attended, when he was asked why, the Central Bank governor of that time, Miguel Cuaderno, replied that he wanted to keep the cost of importing machinery for investments low.