State-run Philippine Deposit Insurance Corp. (PDIC) said Tuesday it is weighing an increase in the maximum deposit insurance coverage (MDIC), potentially marking the first adjustment since 2009.
PDIC president and chief executive Roberto Tan told reporters the agency was in talks with the Bangko Sentral ng Pilipinas and the Financial Stability Coordination Council (FSCC) to study the possible increase in maximum deposit insurance coverage.
“For now, we are in the process of studying how we will be increasing our deposit insurance coverage, to what level, and what measures are needed to instill market discipline and to avoid moral hazard and riskier behavior by banks as well as depositors in this respect,” Tan said on the sidelines of the launch of the Financial Stability Report (FSR) in Manila.
The MDIC is currently set at P500,000, a level that took effect on June 1, 2009.
FSCC is an inter-agency council composed of principals from the BSP, the Department of Finance (DOF), the Securities and Exchange Commission (SEC), the Insurance Commission and the PDIC who convene quarterly.
The 2023 FSR assesses the global story and compares it with what is happening in the local market
BSP Governor Eli Remolona Jr., chairman of the council, said in a report that “for the Philippines, we too had our share of challenges. The inflation rate spiked in January, and the BSP took to the policy rate to mitigate the rise in inflation.”
Remolona said, however, that amid challenges, “I think that we have reasons to cheer: growth is well above the global average, inflation is trending downwards, employment is strong, and corporate balance sheets are getting healthier.”
“What is arguably driving the positive outlook in the market is the fact that the recovery from the pandemic turned out to be much stronger than expected, with little evidence of scarring,” he said.
The Philippine economy, as measured by the gross domestic product, grew by 5.6 percent last year, down from 7.6 percent in 2022 and lower than the government’s target of 6 percent to 7 percent.
Inflation settled at 6 percent, up from 5.8 percent in 2022, on higher food prices.