The Bangko Sentral ng Pilipinas plans to sell its own debt paper in the second quarter after conducting a soft launch in the first quarter, Governor Benjamin Diokno said over the weekend.
“We will have a soft launching by first quarter, and we will launch it formally in the second quarter this year,” Diokno said in a news briefing.
The BSP said it would conduct a market sounding exercise to discuss with counter parties the features of the new securities and get an idea on their preference.
BSP officials earlier said they would avoid competing with the national government in the issuance of debt paper after President Rodrigo Duterte signed the BSP Charter amendments into law early last year.
They said the operational details of the issuance of the central bank debt papers would be carefully coordinated with the national government, particularly in terms of tenor.
President Duterte signed into law Republic Act No. 11211 which amended RA 7653 or the New Central Bank Act.
BSP officials said the amendments to the BSP Charter were both timely and attuned to a fast-evolving market landscape.
The new BSP Charter embodies a package of reforms that will further align its operations with global best practices, improve the central bank’s corporate viability and enhance its capacity for crafting proactive policies amid rising interlinkages in the financial markets and the broader economy.
The law removes money supply and credit levels as basis for determining monetary policy. The focus on these indicators declined among central banks over the years, as fostering price stability now considers a broader set of indicators.
RA 11211 also restores the central bank’s authority to issue debt papers as part of its regular operation. This gives the BSP greater flexibility in determining the timing and size of its monetary operations.
Under the inflation targeting framework, the BSP focuses mainly on achieving price stability, instead of targeting monetary aggregates, as the ultimate objective of monetary policy.
BSP earlier identified its legislative priorities in the present Congress to further promote access to quality financial products and espouse the interests of the general public. These bills include amendments to the Bank Deposit Secrecy laws, the Financial Consumer Protection bill and the Agricultural Financing reforms, among others.
Diokno said the BSP should work with the 18th Congress in the legislation of laws that support a strong economy and promote a high quality of life for all Filipinos.
Proposed amendments to the Bank Deposit Secrecy laws aim to make financial institutions comply with international standards on transparency and combat both domestic and global tax evasion, money laundering and other financial crimes.
The Financial Consumer Protection bill aims to provide a comprehensive financial consumer protection regime that consolidates financial inclusion, financial education, good governance and effective supervision for the purpose of consumer protection.
Reforms to Agricultural Financing include changes in the Agri-Agra Reform Credit Act of 2009 (RA 10000), which mandates banks to allot at least 10 percent of total loanable funds for agrarian reform beneficiaries and 15 percent for farmers and fisherfolk.
Amendments to this law will allow banks to merge their loan allocation to the farm sector as a measure to improve banks’ compliance rate.