Central banks need to switch focus from short-term crisis management to long-term efforts aimed at resuming sustainable and inclusive growth and preventing future crises, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Thursday.
Diokno said in an online briefing the shift was one of the key takeaways from the recent international research conference hosted by the BSP and Reinventing Bretton Woods Committee from Sept. 27 to 29, 2021.
“The major challenge for central banks is how to prevent the next crisis by creating an institutional setting that will enable us to deal with the next crisis,” said Diokno.
The research conference pointed out that while central banks should continue to pay attention to price stability, there might be more risks in financial stability and that central banks should be prepared for the exit strategies of advanced economies.
The BSP International Research Conference is a biennial event that engages central bankers and leading experts from the academe in the discussion of emerging and pressing policy issues.
Speakers for the 2021 conference, the first to be co-hosted by the BSP and RBWC, included Dr. Jakob Frenkel, chairman of the board of trustees of the Group of Thirty and former governor of the Bank of Israel; former US Treasury Secretary Lawrence Summers; and president James Bullard of the Federal Reserve Bank of St. Louis.
The high-level conference discussed central banking and dealing with the enduring impact of COVID-19; new monetary policy era for emerging markets; forecasting future crises; and payment innovation, financial inclusion and financial stability risks.
It also tackled monetary sovereignty and the path towards digitalization of money, central banking in a post-COVID economic world, climate change risk as a redefining issue for financial stability and the global economy post-COVID.
RBWC is a non-profit organization that orchestrates an open and cross-national dialogue among high-level stakeholders committed to promoting a stable global financial architecture and to helping key institutions prepare for changes in the economic landscape.
Meanwhile, Diokno said the government’s financial inclusion push continued to gain traction as cash agents expanded their presence in unbanked and underbanked areas in the country.
Diokno said the number of active cash agents grew by 242 percent to 58,000 in 2020 from 17,000 in 2019, a positive development in the central bank’s financial inclusion drive.
“Cash agents helped increase the percentage of cities and municipalities reached by banking services from 70 percent to 85 percent,” Diokno said.
“They play a significant role in financial inclusion by expanding the reach of financial services beyond bank branches and transitioning the unbanked population from cash to digital transactions,” he said.
Cash agents are retail outlets like small shops, convenience stores, supermarkets, pharmacies, and pawnshops contracted by banks that offer basic banking services and perform real-time financial transactions for customers in far-flung areas.
They can accept and disburse cash on behalf of a bank, allowing customers to perform self-service transactions, including deposits and withdrawals, balance inquiries, fund transfers and bills payments.