Today, we add a new and powerful instrument to our policy toolbox for monetary management.
The Bangko Sentral ng Pilipinas will introduce the issuance of its own debt securities to our arsenal of monetary operations. These securities will be in addition to the term deposit facility that is already in use and will complement the bond issuances regularly undertaken by the Bureau of the Treasury.
Through the Memorandum of Agreement that will be signed today, we will ensure proper coordination between the two issuers. This is important for achieving a finely-tuned liquidity process.
We are living in a difficult time. The COVID-19 pandemic has upset the entire global economy. We face a possible deep global downturn that will adversely affect our economy’s growth and development. Our financial system, although fundamentally strong, will be challenged by the severe economic realities of the day.
With all the uncertainty about the progress of this contagion, we need to continuously sharpen our fiscal and monetary tools. This will allow us some degree of certainty in this very uncertain world.
The new monetary instrument in the BSP policy toolbox assumes greater significance in this light. By being able to issue debt securities, the BSP is empowered with a more targeted approach to achieving desired monetary policy outcomes. Should there be excess structural liquidity in the financial system, the BSP will be able to respond more effectively.
More targeted and more market-oriented liquidity management will ensure the best conditions for achieving the efficiency and stability of our financial system.
With our fiscal and monetary institutions on solid footing, we are confident that the pain brought by this crisis will be short and our recovery will be strong.
By moving together in the right direction, we can beat this pandemic and come out more resilient than ever.