Bangko Sentral Governor Amando M. Tetangco Jr. hosts the annual cocktail reception for the banking community recently. It is Say Tetangco’s way to thank the banking industry and, probably, to express his valedictory.
Press reports indicate at least three people could be BSP governor Bank of the Philippine Islands President Aurelio “Gigi” Montinola 3rd, and two deputy governors of BSP—Nestor Espenilla and Diwa Guinigundo.
Brilliant but unassuming, Montinola epitomizes the best in a commercial bank CEO. He made the Ayala-owned Bank of the Philippine Islands immensely profitable by recasting its stodgy image and making it more inclusive with its focus on consumer banking rather than corporate, and by charging the more reasonable interest rates and bank fees.
In fact, in this decade of the 21st century Montinola sees financial accessibility and inclusive banking as the main trend, along with increasing Asean regional integration, continuing development of capital markets, and greater penetration of Internet and mobile banking. The Ayala group has the first-mover advantage in mobile banking.
Still, among the worst Philippine central bank governors were those who used to head private commercial banks. Jobo Fernandez (1984 to 1990) punished the economy with unheard of 44-percent interest rates that forced the economy to freeze. Joey Cuisia (1990 to 1993) forced the state to absorb more than P400 billion in foreign exchange losses of the private sector, which made the wrong bet on the peso. So huge were the losses that the old Central Bank had to be phased out (I didn’t say it went bankrupt) and a new Bangko Sentral ng Pilipinas had to be established as the central monetary authority and to hide the losses.
The best central bank governors were insiders or those who spent years in public service. Like Miguel Cuaderno, governor from 1949 to 1960. He presided over the Philippines’ rise as the second most prosperous economy in Asia, after Japan.
Or locally educated Gregorio Licaros Jr. (governor from 1970 to 1981) who stabilized the peso and the payments systems in the first foreign credit crisis of the 1970s and rescued the Philippines from recession after the Great Flood of 1972.
Or Harvard-trained lawyer Gabriel Singson (1993 to 1999). He ushered in major reforms that enabled the Philippines to ride out the adverse effects of the 1997 Asian Financial Crisis.
And of course, you have the economist Tetangco who has masters in public policy and administration from the University of Wisconsin. He has spent 37 years at BSP.
Tetangco’s record is a tough act to follow. “We delivered on our mandate to provide stability that helps ensure balanced and sustained economic growth,” he says.
Under Tetangco and Team BSP, the central bank controlled inflation, brought down interest rates, strengthened the peso, boosted foreign reserves to record high ($62 billion by end-2010), stabilized the banking and financial system, and in a way, saved the Philippines from recession in 2008 and 2009 even as two-thirds of the globe was gobbled up by the worst economic slowdown in 80 years.
For ordinary Filipinos, taming inflation meant increased purchasing power, which partly explains the boom in malls and consumer spending.
More important, BSP’s inclusive banking or micro finance program meant reaching out to what is called the Bottom of the Pyramid, the 90 percent who are mainly poor and yet constitute the majority of the population.
The Philippine economy has posted 47 consecutive quarters of growth beginning with the first full year of President Joseph Estrada in 1999. Of those 47 quarters, 22 were scored during Tetangco’s watch when the GDP averaged annually—for the first time in a long while—5.4-percent growth.
With population growing at 2 percent per year, the economy was growing at 3.4 percent (5.4 percent minus 2 percent), the first time that economic growth exceeded population growth rate. The result is significant, if not dramatic, per capita income growth.
The year just ended was a particularly good year. The economy expanded by 7.5 percent in the first three quarters of 2010, the best growth rate in 22 years. For the first time, the value of economic output, plus income from abroad (the gross national product) hit P9 trillion, which at P44 to $1, is worth $204.5 billion. With a population of 94 million, the country has per capita income of $2,175.5, more than double from the $967.3 in 2001 when President Arroyo became president.
BSP’s work is measured usually in three pillars—prices, the balance of payments, and the stability of the banking and financial system. “We did quite well insofar as the three pillars of central banking are concerned,” Tetangco asserts with justifiable pride.
Inflation went single digit—averaging 3.8 percent in January to November. The payments system, in surplus by $13 billion, a record, inspires confidence. The banking system is sound and stable. Foreign reserves are $62 billion. We are rich.
Congratulations, Gov Tetangco.
Press reports indicate at least three people could be BSP governor Bank of the Philippine Islands President Aurelio “Gigi” Montinola 3rd, and two deputy governors of BSP—Nestor Espenilla and Diwa Guinigundo.
Brilliant but unassuming, Montinola epitomizes the best in a commercial bank CEO. He made the Ayala-owned Bank of the Philippine Islands immensely profitable by recasting its stodgy image and making it more inclusive with its focus on consumer banking rather than corporate, and by charging the more reasonable interest rates and bank fees.
In fact, in this decade of the 21st century Montinola sees financial accessibility and inclusive banking as the main trend, along with increasing Asean regional integration, continuing development of capital markets, and greater penetration of Internet and mobile banking. The Ayala group has the first-mover advantage in mobile banking.
Still, among the worst Philippine central bank governors were those who used to head private commercial banks. Jobo Fernandez (1984 to 1990) punished the economy with unheard of 44-percent interest rates that forced the economy to freeze. Joey Cuisia (1990 to 1993) forced the state to absorb more than P400 billion in foreign exchange losses of the private sector, which made the wrong bet on the peso. So huge were the losses that the old Central Bank had to be phased out (I didn’t say it went bankrupt) and a new Bangko Sentral ng Pilipinas had to be established as the central monetary authority and to hide the losses.
The best central bank governors were insiders or those who spent years in public service. Like Miguel Cuaderno, governor from 1949 to 1960. He presided over the Philippines’ rise as the second most prosperous economy in Asia, after Japan.
Or locally educated Gregorio Licaros Jr. (governor from 1970 to 1981) who stabilized the peso and the payments systems in the first foreign credit crisis of the 1970s and rescued the Philippines from recession after the Great Flood of 1972.
Or Harvard-trained lawyer Gabriel Singson (1993 to 1999). He ushered in major reforms that enabled the Philippines to ride out the adverse effects of the 1997 Asian Financial Crisis.
And of course, you have the economist Tetangco who has masters in public policy and administration from the University of Wisconsin. He has spent 37 years at BSP.
Tetangco’s record is a tough act to follow. “We delivered on our mandate to provide stability that helps ensure balanced and sustained economic growth,” he says.
Under Tetangco and Team BSP, the central bank controlled inflation, brought down interest rates, strengthened the peso, boosted foreign reserves to record high ($62 billion by end-2010), stabilized the banking and financial system, and in a way, saved the Philippines from recession in 2008 and 2009 even as two-thirds of the globe was gobbled up by the worst economic slowdown in 80 years.
For ordinary Filipinos, taming inflation meant increased purchasing power, which partly explains the boom in malls and consumer spending.
More important, BSP’s inclusive banking or micro finance program meant reaching out to what is called the Bottom of the Pyramid, the 90 percent who are mainly poor and yet constitute the majority of the population.
The Philippine economy has posted 47 consecutive quarters of growth beginning with the first full year of President Joseph Estrada in 1999. Of those 47 quarters, 22 were scored during Tetangco’s watch when the GDP averaged annually—for the first time in a long while—5.4-percent growth.
With population growing at 2 percent per year, the economy was growing at 3.4 percent (5.4 percent minus 2 percent), the first time that economic growth exceeded population growth rate. The result is significant, if not dramatic, per capita income growth.
The year just ended was a particularly good year. The economy expanded by 7.5 percent in the first three quarters of 2010, the best growth rate in 22 years. For the first time, the value of economic output, plus income from abroad (the gross national product) hit P9 trillion, which at P44 to $1, is worth $204.5 billion. With a population of 94 million, the country has per capita income of $2,175.5, more than double from the $967.3 in 2001 when President Arroyo became president.
BSP’s work is measured usually in three pillars—prices, the balance of payments, and the stability of the banking and financial system. “We did quite well insofar as the three pillars of central banking are concerned,” Tetangco asserts with justifiable pride.
Inflation went single digit—averaging 3.8 percent in January to November. The payments system, in surplus by $13 billion, a record, inspires confidence. The banking system is sound and stable. Foreign reserves are $62 billion. We are rich.
Congratulations, Gov Tetangco.
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