To maintain resilience in the financial sector, Bangko Sentral ng Pilipinas or BSP will ramp up digital shift and financial literacy to counter unpredictable factors like the weather and geopolitical disruptions.

The central bank's main concern has been to tame inflation that created havoc in other economies where the actions to counter its effects have been to slow if not ineffective. 

Amid the uncertainties, the BSP also pushed green financing among private financial firms as the way toward an inclusive economic growth.

Inflation was the top concern of Filipinos based on independent surveys with majority saying stretching the budget was a challenge.

Meanwhile, the use of digital banking and e-wallets maintained the strong growth trajectory as more Filipinos own smartphones.

BSP said it aims to increase the number of Filipinos with bank accounts to 70 percent of the adult population and the share of digital retail payments to 50 percent of all transactions.

Inflation jump

Preventing an inflation shock, the policy-making Monetary Board periodically adjusts its policy rates and announces its decision on a regular schedule.

After the record-high inflation of 8.7 percent in January, the BSP raised its rate to 6.5 percent by 450 basis points on an off-cycle or earlier schedule in October, following an inflation jump to 6.1 percent in September from 5.3 percent in August.

The BSP rate has remained at 6.5 percent which helped inflation to decelerate to 4.1 percent last month. This was near the BSP target of 2 to 4 percent.

"The tightening has been working its way. The lag is somewhat long and I wish it were shorter. We have to improve the transmission mechanism of the monetary policy," BSP Governor Eli Remolona Jr. said.

Aside from monthly inflation figures released by the Philippine Statistics Authority, Remolona said the central bank's Monetary Board will continue to monitor expectations of consumers and businesses about the supplies of commodities and their prices.

"The data that is important is the data on expectations because we're a country that is prone to supply shocks which often lead to expectations. If they're large enough and frequent enough, that leads to higher inflation and second-round effects," he said.

After India banned exports of non-basmati white rice, rice prices in the local market spiked by 17.9 percent in September from 8.7 percent in the prior month, while drought from El Niño further dried up irrigation in rice fields.

Partnerships for financial education

The BSP expanded its financial literacy program in June through a free online course it is developing with BDO Foundation and the Technical Education and Skills Development Authority, or TESDA. The BSP expects over 4 million Filipinos to benefit from the course.

The course will be available next year on the TESDA's website where students can learn financial planning, saving and budgeting, debt and investment management, digital financial literacy and consumer protection.

"The BSP recognizes the vital role of technical-vocational learners whether they decide to pursue employment or entrepreneurship here or abroad," former BSP Governor Felipe Medalla said.

TESDA Director General Danilo Cruz said the course will prepare students to become self-reliant and adaptive to technological advancements.

"The 21st-century workplace demands workers to demonstrate self-management and develop attitudes toward lifelong learning and career development. This enables them to make sound financial decisions toward the attainment of their life and career goals," he said.

With this course, the BSP is confident the Filipino population with banked accounts can grow to over 70 percent from 53 percent in 2021.

Paleng-QR Plus, e-money in provinces

Paleng-QR Ph Plus uses QR codes to be scanned by e-wallets to pay for goods at public markets and transport hubs.

The BSP reported there are now 13 local government units offering Paleng-QR outside Metro Manila. They include the cities of Baguio, Davao, Tagbilaran, Naga, Lapu-Lapu, Pasig, Carmona, Bacolod, Camiling, Victorias, Mandaue and Ozamiz.

Last month, Cotabato City in Maguindanao became the first area in the Bangsamoro Autonomous Region in Muslim Mindanao to use digital payments in public markets and transport hubs.

Recently this month, the BSP launched Paleng-QR Ph Plus at SUKI Market in Pangasinan's Alaminos City where 700 vendors and over 3,600 tricycle drivers can be paid by customers digitally using their e-wallets.

To further promote QR payments, the central bank put up at the public market a currency exchange booth where consumers and vendors can turn their unfit money into digital money.

"Unfit banknotes are dirty, soiled, limp, stained, or have faded print and obvious writings. Unfit coins are those with corrosion or markings," the BSP explained.

The BSP also deployed 25 coin deposit machines in malls located in Metro Manila and nearby areas to convert consumers' coins into either digital money or shopping vouchers.

Introduced in June, the machines have collected coins amounting to over 37.2 million pieces from over 37,000 transactions.

First cashless expo

With its partnership with the Department of Trade and Industry, the BSP opened last month the country's first Cashless Expo at the World Trade Center in Pasay City where micro, small and medium enterprises or MSMEs sold their products using e-payments.

"This expo will likewise promote consumer awareness and induce trial of digital payments to influence their preference by allowing them to experience firsthand the benefits of using digital payments, and providing financial literacy sessions where they can learn how to responsibly use such services," BSP Deputy Governor Mamerto Tangonan said.

For the MSMEs, he said they can reach more customers as more Filipinos become digitally literate.

"This expo will not only promote digitalization and financial inclusion of our MSME sector, but just as importantly, the craftsmanship, artistry, and products that we can say are proudly Pinoy," Tangonan said.

Protecting Mother Earth

The BSP also will be expanding financing of private banks for sustainability amid the government's commitments to global carbon footprint reduction against climate change.

In compliance with its 11-point Sustainable Central Banking Strategy, the BSP said banks must implement these measures for two years after they have been declared effective.

BSP will allow the temporary loan top-up of 15 percent to single borrower's limit of banks for projects also anchored on sustainability frameworks and plans by the Philippine government or Southeast Asian countries.

Second, the BSP also approved a gradual reduction in reserve requirement of banks for sustainable bonds from 3 percent to 0 percent.

The central bank will allow a reduction by 200 basis points from the effectivity of the policy and another 100 basis points in the succeeding year.

"We will identify and create appropriate incentives that are within our mandates empowering the banking system to steer capital flows toward growing green or sustainable investments and accelerate the development of solutions addressing just transition and adaptation-related challenges," BSP Governor Eli Remolona Jr. said.