The Bangko Sentral ng Pilipinas (BSP) released the Report on the Philippine Financial System for the Second Semester of 2020.[1]
The enhanced Report highlights the narrative of the Philippine financial system as it entered the COVID-19 pandemic in a relatively strong position in 2020 and weathered its effects while ensuring relevant delivery of financial services upholding its critical role to the domestic economy.
The COVID-19 pandemic tested the resilience of the banking system and the robustness of the financial ecosystem as the country reacts to the global health crisis. This novel crisis significantly affected the banking operations as the community quarantine and social distancing measures prompted banks to adjust their daily banking services.
In support, the BSP deployed targeted and time-bound regulatory relief packages that facilitated the uninterrupted flow of financial services in the country especially during this challenging time of the pandemic. “The relief packages strived to address the critical requirements of the economy while at the same time ensuring that financial stability is not compromised”, BSP Governor Benjamin Diokno said.
The financial soundness indicators (FSIs), which assessed the banking system’s strengths and weaknesses, affirmed that the banking system is resilient during the pandemic year 2020 but implied that consequent risks from lending should be monitored, including emerging risks from demand side and supply side factors, which may amplify impact on the economy.
The Report also highlighted that foreign currency deposit system, trust entities, foreign banks in the country, quasi-banks and other non-bank financial institutions all showed positive performance during the review period. Meanwhile, the pawnshops and money service businesses (MSBs) proved their role as critical access points for the improved service delivery of the financial system in 2020.
Moving forward, the BSP stands committed and ready with its enhanced onsite and off-site surveillance tools and prudential policy toolkit to promote the financial sector reform agenda for sustaining the sound and stable financial system conducive to a strong, dynamic and inclusive economic growth recovery for all Filipinos.
[1] Available at https://www.bsp.gov.ph/SitePages/MediaAndResearch/PublicationsAndReports.aspx
