FSCC stays alert amid global market uncertainty

In the light of publishing its 2023 Financial Stability Report (FSR), the Financial Stability Coordination Council (FSCC) convened for its 38th Executive Committee meeting to scrutinize the early 2024 economic developments and how they compared to the previous year’s trends.

FSCC Chairman and Governor of the Bangko Sentral ng Pilipinas (BSP), Eli M. Remolona, Jr., recognized the new waves of uncertainty that have emerged in advanced economies since the end of last year. These changes, he noted, are poised to impact the Philippines in multiple and varied ways.

“While global markets have been very fluid, the Philippines has shown its resilience by expanding at a pace that exceeds that of most other economies in the world,” Remolona said.

The FSCC had anticipated rate cuts by the U.S. Federal Reserve at the close of 2023, but recent U.S. data have tempered these expectations. Despite this, the FSCC is confident in the strength of the local market, even when considering potential external economic pressures.

A significant focus of the meeting was on the upcoming maturity of a considerable portion of corporate bonds and loans in 2024. The Council is preparing for a substantial number of these to be refinanced, indicating a proactive stance towards maintaining financial stability.

The FSCC, acknowledging the historic role of banks in providing corporate finance, emphasized the need for a robust capital market that works in tandem with the banking system. Such a market would not only provide alternative funding options for corporations but also play a crucial role in risk management.

Looking ahead, the Council is optimistic about witnessing tangible advancements in the fixed income market, which would grant Philippine corporations broader access to the bond market.

“Enhancing the capital market is an issue that is shared by all members of the FSCC,” said Remolona. He stressed the importance of proactive regulatory roles and called for deliberate collaboration among market participants.

The FSCC’s continuous efforts to monitor the funding needs of corporations are integral to its mission to drive economic growth while mitigating any unforeseen adverse effects on the economy.

Founded in October 2011 as a collaborative effort by the BSP and other financial institutions, the FSCC was formalized under Executive Order No. 144 in July 2021.

The Order institutionalized the Council’s role in managing systemic risks in the Philippines, marking it as a central figure in ensuring the country’s economic stability and resilience amidst global fluctuations.