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BSP focusing on too micro matters — experts

Banking regulators are focusing too much on relatively small matters on how bankers operate the business but they can’t see the bigger problem that may arise, an observer in the finance industry based abroad said.
According to him, such policy has made the Bangko Sentral ng Pilipinas prepared only on micro policies, which is not the ideal way to regulate the banking industry.
“They focus too much on micro policies. They can’t tell bankers how to run their business, how to price their services, etc.,” the observer told the Daily Tribune.
Many observers have complained the BSP is not doing enough actions lately. It has not reduced the reserve requirement (RR) ratio despite growing calls for it. Earlier, it was reported that at least P60 billion will be added to the financial system once the RR of unibanks, now at 20 percent, is cut even by one percent.
“There is too much liquidity already,” another observer added.
Others, meanwhile, are expecting positive results when the central bank said weeks ago it will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with BSP’s price and financial stability objectives.
Other observers said regulators must work on how to combat big time fraud inside the financial system which can hurt depositors and stakeholders.
“Can the BSP do something when Phisix drops 40 percent? BSP will be judged when the global crisis happens again,” another observer said.
One that must be studied upon is the algorithmic trading that is very fast it can change in just a snap of time. Algorithmic trading is now used in almost 80 percent of bourse market in the world but the Philippines is unsure if it can catch up in this system, a critic said.
“They should just be close enough to see what’s going on in this interconnected world. Copy Canadian regulators, not American regulators,” he said.
The BSP regulates banks, pawnshops, money changers and remittance centers while SEC regulates lending investors.
“In Canada, banks, insurance and others are under OSFI,” the source explained.
The Office of the Superintendent of Financial Institutions (OSFI) regulates and supervises all banks and federally incorporated or registered trust and loan companies in Canada, as well as insurance companies, cooperative credit associations and fraternal benefit societies.
Ed Velasco

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