THE BANGKO SENTRAL ng Pilipinas (BSP) is broadly expected to remain a strong regulator despite the death last Saturday of its governor, Nestor A. Espenilla, Jr.
The 60-year-old central bank chief passed away on Feb. 23 after a battle with tongue cancer.
Mr. Espenilla announced on February last year that he was declared cancer-free after being diagnosed in November 2017.
He had taken intermittent medical leaves late last year, as he went through radiation therapy and chemotherapy.
The Monetary Board made the announcement in the wee hours of Sunday.
After a special meeting held Saturday, the body named Deputy Governor Maria Almasara Cyd N. Tuaño-Amador as officer-in-charge of the BSP, pending President Rodrigo R. Duterte’s appointment of a new central bank chief.
A ban on new appointments and reassignments for government employees will kick in next month ahead of the May 13 midterm polls.
Mr. Espenilla was to serve a six-year term until July 2023 after President Rodrigo R. Duterte appointed him to the post in July 2017.
He pledged a “Continuity Plus Plus” reform agenda, which meant building on the gains of his predecessor, former BSP Governor Amando M. Tetangco, Jr.
Market watchers expect the central bank to remain business as usual in terms of day-to-day operations, with protocols in place for continuity.
“BSP has done it well before. When Gov. Tetangco took the helm after Gov. (Rafael B.) Buenaventura passed away, BSP transitioned well,” Emilio S. Neri, Jr., lead economist at the Bank of the Philippine Islands, said when sought for comment.
The three deputy governors have taken turns serving as officer-in-charge of the central bank whenever Mr. Espenilla was away on medical leave, ensuring continuity at the helm of the monetary authority.
For his part, Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, noted that this would be “a test of how strong BSP, as an economic institution, has become.”
“2018 was a test for the Philippines amidst the uncertainties facing the world today. Somehow, with all the challenges, the Philippines managed a respectable growth and this, I can say, is a testament to the late governor’s type of leadership,” Mr. Asuncion said.
“It may not be perfect, but, I think, it was needed at the perfect time.”
Mr. Espenilla spent nearly three decades at the BSP, joining it in 1981. Prior to taking the governor’s seat, he served as deputy governor for bank supervision.
On monetary policy, observers expect the BSP to remain data-dependent.
“The gradual reduction in large banks’ RRR would likely remain on course and/or any cut in local policy rates amid easing trend in inflation is still possible, provided that inflation convincingly eases and subsequently sustains at the inflation target of 2-4%,” added Michael L. Ricafort, economist at the Rizal Commercial Banking Corp.
Under Mr. Espenilla’s watch, the central bank last year saw banks’ reserve requirement ratio (RRR) trimmed by two percentage points to 18%, which he pledged to bring to single-digit level by the end of his term to reduce the cost of money and keep the standard at par with the rest of the region. The year also saw benchmark interest rates rise by a total of 175 basis points to 4.25-5.25%, which was meant to rein in surging inflation.
A measure amending the BSP Charter, a key reform pending for two decades designed to strengthen the monetary authority, was signed into law just last week.
Market participants also celebrated Mr. Espenilla’s push to embrace digital payments, particularly via embracing the rapidly growing financial technology (fintech) space.
“His legacy lives on in every effort that we all do to serve the unbanked, uncarded and underserved Filipinos with digital financial services,” said Orlando B. Vea, chairman of the Philippine eMoney Association.
Malacañang, through Presidential Spokesperson Salvador S. Panelo, condoled with Mr. Espenilla’s family, citing his legacy of “making financial services closer to Filipinos.”
Under the National Retail Payment System, the BSP targets to shift cash-heavy transactions to digital avenues which, in turn, should help broaden access to financial services and spur increased economic activity.
The central bank is looking to lift the share of digital payments to 20% of total transactions from a measly 1% recorded in 2013, with the country still cash-reliant at present.
Over the past year, the BSP rolled out two automated clearing houses meant to process digital payments, namely the InstaPay and the Philippine Electronic Fund Transfer System and Operations Network. This also allows bank clients to send money across accounts and e-wallets from different banks.
Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte added that the late BSP chief “was at the forefront of creating a regulatory environment in support of a cash-light economy,” and put in place new rules that allow financial firms to pursue digital banking.
The Bankers Association of the Philippines also said in a statement that Mr. Espenilla’s legacy is the “stronger and more inclusive banking system” of the country.
Mr. Espenilla completed his BS Business Economics and Masters in Business Administration from the University of the Philippines, and took a Masters in Policy Science from the Graduate Institute of Policy Science in Tokyo, Japan.
He is survived by his wife Maria Teresita Festin Espenilla, three children and a grandson. Public viewing starts 3 p.m. on Feb. 25 at The Arlington Chapel at Aeternum (Bayani Road, cor. C5 Heritage Park, Fort Bonifacio, Taguig). — Melissa Luz T. Lopez
Upon his appointment as BSP Governor in July 2017, Mr. Espenilla sat down with BusinessWorld for an interview.
Here are excerpts.
On why he stayed with BSP since 1981.

On how his tenure as BSP Governor will be different.

On his reputation as BSP’s “bad cop.”