@avonmora Got this from financial laws class. One of the reasons I believe is how it’s integral for BSP to establish its quasi- “independence” from the government. This means that its policies and actions are largely based on data and expert judgement, and not merely the whims of a broken government.
And if you pay a particular interest in global finance, you’d see how most economies went to shit because of inflation. One of the reasons why this country hasn’t fallen into chaos is because BSP continues to uphold its mandate of price stability, ensuring the convertibility of our currency and maintaining the integrity of the financial system.
i don’t work for the BSP ha. I guess it’s just one of the very few gov agencies left that I trust to do its job right.
@resjudicata Most central banks are like that though( i.e. independence from politics). The question is why BSP is “one of the best” among other Central Banks.
@bay123 don’t have the complete set of numbers but I suppose inflation and fx rates were dismal during and post-covid in many countries. I’m not discounting also how prices have skyrocketed the past few months here…
but my best bet is based on what’s been going on in other countries (e.g., Turkey, Sri Lanka, Venezuela, and I’d argue developed nations too), the BSP at least helped in cushioning the full-blown effects of the ongoing global shitstormss.. that it’s enough to be recognized by the international central banking community
@bay123 OFW remittances help a lot. Global economic downturns negatively affect the foreign investments and export payments going into a country, and worsens capital flight, making central banks of those countries having little recourse on how to keep their dollar reserves. The Philippines, on the other hand, is not yet really a hub for foreign investments and exports, compared to countries with higher per capita GDP than us. We're affected only a little. OFW remittances, and now also BPO money, while they do decline during global or regional downturns, their decline isn't as worse as what's observed in foreign investments, export payments, and worsening of capital flight. In short, even in global and regional downturns, BSP still has a way of minimizing the decline of our dollar reserves, thanks to OFW remittances and BPO money. Though I think 15 to 25 years from now, if the Philippine economy becomes more export driven, BSP would start feeling the pressure that other central banks in the world experience.
@lisasue OFW remittances helped, but its also a additional challenge, they dont want the peso to be too strong or too weak. Balance dapat. Kaya nga nagiging best sila because they are tend to have good policies when it comes.
Also additional factor and challenge din na ibat iba pinanggagalingan ng remittance. Because some regions tend to compete yung rates and philippines is standing between them.
@rightwinger25 A central bank will always want more dollars in than dollars out. If too many dollars are coming in, just print more pesos to prevent a strong peso to a dollar. It's the dollars going out the country that's the problem. Because BSP can't really unprint peso (or remove them from circulation) as fast.
@lisasue Is that your monetary policy ? They will want more dollars policy ? Just print money when too many dollars coming in ?
Remember when there was time that peso became too strong vs dollar. They didnt print money. OFWs complained, they didnt bother, they sticked with their policy.
Clearly that policy paid off.
@rightwinger25 You see. The thing that you originally said is really only a problem of oil-exporting nations. Overabundance of dollars going in to their countries, that they need to spend them fast (like importing fighter jets) to negate the effect of too much dollars going into their economy. They call it petrodollars. That reality will never happen for the Philippines. We won't have that problem. We're not Saudi-rich. Our country can always benefit from more dollars going in. It only became problematic in the mid-2000s for reasons unrelated to OFW remittances. And BSP managed to prevent a strong peso back then. How? By lowering the interest rates, urging loans, making banks order more pesos from BSP (a.k.a., printing more pesos). That's what the BSP did to solve the problem of strong peso. I'm merely describing what they did. It's not my personal monetary policy. It's BSP's. It's a actually common recourse of action for most central banks in the world which you don't seem to be aware of.
@lisasue Yes thats how they did back then or what they have been doing. But there was a time they did the opposite thing , they kept the policy rates and continue to buy into dollars despite of having over abundance of it. OFWs complained that the dollar they have been sending have little value in PH, but BSP didn't care about their feelings. They kept the rates and didnt print. Instead kept the dollar reserve buying in low.
Also its not just dollars , they needed to balance out moneys coming from the middle east.
@lisasue What Im trying to say is , they dont have a automatic response , they will try to factor in internal and external things.
Just because they recieved lots of dollars they will just print out money and lower interest rates automatically.
Like now we are recieving lots of foreign money , why the interest rates are kinda high?
Whatever they decide I think it will be the right one, since they have been on point with the previous policies;
