News Update PHL authorities on alert for weaknesses in banking system

The fragile economies of Europe and the US is keeping Philippine monetary authorities on alert for potential weaknesses in the country’s banking system, the Bangko Sentral ng Pilipinas said Friday. "Instead of targeting absolute numbers then, our focus has been on monitoring potential systemic weaknesses in maintaining a healthy balance between inputs and outputs as well as between market innovation and risk-taking," said BSP Gov. Amando Tetangco Jr. He noted the importance of having a good perspective — on the part of regulators — on the distribution of exposures. "It is not just the growth number of the total exposure but also getting a sense of which sectors are receiving new loans," Tetangco said. By 2012, the central bank chief expects the economy to get a boost from the Aquino administration’s public-private partnership (PPP) program, which he also expects to take off next year. "We have previously suggested that the economy can benefit from further fiscal spending as this relates to the build-up in productive capacity," he said. There is enough money in the system, Tetangco noted, but that there is an accompanying need to channel the money in viable projects. "Given liquidity levels, having a viable outlet is important. Having these outlets build capacity for future needs is even better," he added. Domestic liquidity or M3 totaled P4.305 trillion as of end-October, up P279 billion from P4.026 trillion a year earlier but down P51 billion from P4.356 trillion end-September after the central bank's Monetary Board raised the reserve requirement ratio for banks to 21 percent from 19 percent. — VS