"There was absolutely no need to bring in an outsider this time around."
"There was absolutely no need to bring in an outsider this time around."
A new governor of the BSP (Bangko Sentral ng Pilipinas) has been appointed by the President of the Philippines following the death of the incumbent.
The BSP governorship is one of the most important positions in the government—so important that a charismatic and intellectually well-endowed governor can be, in my view, the sixth most powerful figure in this country. For this reason, the nation’s Chief Executive should—nay, must—appoint to the position of chief monetary policymaker an individual who fulfills four criteria. These are a widely held reputation for professional competence, a public perception of integrity, a good working knowledge of the Philippine banking system and, last but not least, a capacity to obtain the full respect and cooperation of the BSP community. An appointee who does not fulfill these criteria is bound to have difficulty performing one of the nation’s most challenging jobs.
The President of the Philippines recently appointed the fourth governor of the BSP, which in 1993 replaced the Central Bank of the Philippines as this country’s central bank. The new governor enjoys the recognition of his academic peers as a well-trained economist. He has come to the BSP from the Executive branch of the government.
Did President Rodrigo Duterte do the right thing in selecting the new appointee as the fourth government of the BSP? Let us bring the above-stated criteria into play.
Though the new governor’s professional experience has been largely on the fiscal side of the economic equation, his training as an economist has rendered him ready to take on the task of chief monetary policymaker. Professional competence is not an issue here.
But broad knowledge of the workings of the Philippine banking system—the core of the BSP’s constituency—is. The knowledge that economics students imbibe about the banking system is one thing; familiarity with how banks operate—especially how they manage to get BSP rules and regulations—is another. The new governor’s previous job experience in this regard is not at all reassuring.
A further criterion that the President of the Philippines should have fully taken into account in selecting the latest BSP governor was its impact on the morale of the men and women who make the BSP run. The onset of demoralization comes from knowledge that the ranks of the nation’s monetary authority include men and women who are well qualified to sit in the governor’s chair. Three deputy governors are standouts—Diwa Guinigundo, Cyd Tuaño and Chuchie Fonacier. All three have at one time or another been seconded with the IMF (International Monetary Fund). Although initially resisted by the BSP rank and file, commercial banker Rafael Buenaventura was eventually embraced by them. Three of the new governor’s four predecessors—Gabriel Singson, Amando Tetangco Jr. and Nestor Espenilla Jr.—were all insiders. There was absolutely no need to bring in an outsider this time around.
The final criterion for rightness in the selection of the BSP governorship concerns integrity. The integrity of the BSP chief is so crucial to this country’s monetary life that the old phrase being “like Caesar’s wife” is highly appropriate. Like Caesar’s wife, the governor of the BSP must be above all suspicion. There must be no cloud above his integrity. He must come to the nation’s monetary authority with no integrity-related baggage. The incoming governor has such baggage.
Applying the above-discussed criteria to the selection and appointment of the new BSP governor, can it be said that the President of the Philippines did the right thing? I don’t think so.
Erratum: In a recent column on the Otso Diretso, I should have said Senator Koko Pimentel and Otso candidate Pilo Hilbay both placed first in the Bar exams. And Hilbay was professor at, not dean of, the U.P. College of Law. My apologies.