An agile, forward-looking central banker

At the start of this year, the business and banking communities have received great news with an outstanding recognition accorded to one of the country’s long-standing public servants.
The Banker, a publication owned by the Financial Times, recently awarded the Global Central Banker of the Year 2022 to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno. This is the first time for a Philippine central banker to receive the accord. Along with the said honor, the publication also recognized the governor as the Asia Pacific Central Banker of the Year.
In giving the award, the publication cited Mr. Diokno for helping “to see the Philippines through the COVID-19 pandemic” while pushing “ahead with his modernization agenda for the country’s banking system.” It also recognized the governor’s goal of “creating a strong banking sector that supports individual consumers while moving forward with the digital banking agenda.”
The fifth governor of the BSP, Mr. Diokno was appointed in March 2019, taking over the late BSP governor Nestor Espenilla, Jr. Aside from pursuing the BSP mandates of price stability, financial stability, and efficient payments, and settlements system, the governor also endeavors “to bring central banking closer to the Filipino people.”
This is very much evident with his vision of a ‘cash-lite’ economy and a financially inclusive society. Driven by this vision, Mr. Diokno aims to shift at least 50% of retail payment transactions to digital form and achieve 70% transaction account ownership among adult Filipinos by 2023, when his term ends. He is also supporting local payment providers through the use of the national ‘QR PH’ standard for QR code payments, and he strongly advocates for the Philippine ID System.
Mr. Diokno, The Banker also noted, pledged to bolster existing financial literacy programs with additional support in digital skills development in order to ensure that no citizen will be left behind in the move to digital payments.
“He has called for customer centricity across the whole financial space, including insurance and capital markets, to help the underserved feel comfortable and secure accessing financial services. Greater levels of regulation are also being introduced to payment providers to protect consumers from fraud,” the publication continued.
Mr. Diokno was also noted by The Banker for his call for more mergers and acquisitions (M&As) between local banks to strengthen the banking sector through a memorandum of agreement pledging to allow bank M&As to proceed within 55 days. The governor’s support for transition to low-carbon, evidenced by the BSP-headed ‘Green Force’ technical working group and the Philippine Sustainable Finance Roadmap, was also recognized.
Regarding the central bank’s response to the pandemic, The Banker noted Mr. Diokno’s stance of holding interest rates low for as long as possible to maintain stability. “Believing that the current environment is transitory, he decided to hold on to an accommodative monetary policy to support the economy,” the magazine wrote.
As early as February 2020, the BSP cut policy rates by 25 basis points (bps), and then it was cut by another 175 bps before the year ended. Other measures implemented during the pandemic included reducing the reserve requirement ratio to increase the volume of loanable funds in the system and incentivizing bank lending to micro, small, and medium enterprises.
Prior to serving BSP governor, Mr. Diokno served three administrations of the government, particularly under the Department of Budget and Management. He served as Budget Undersecretary from 1986 to 1991, then Budget Secretary from 1998 to 2001 and from 2016 to 2019. He also served as Fiscal Adviser to the Philippine Senate, chairman and chief executive officer of the Philippine National Oil Company, and chairman of the Local Water Utilities Administration.
The following major policy reform contributions are attributed to Mr. Diokno: providing technical assistance to the 1986 Tax Reform Program to simplify the income tax system and introduce the value-added tax; helping design the 1991 Local Government Code of the Philippines; initiating a What-You-See-Is-What-You-Get policy to streamline the release of funds; and sponsoring the internationally lauded Government Procurement Reform Act to modernize, regulate, and standardize government procurement activities in the Philippines.
Outside government work, Mr. Diokno is professor emeritus of the University of the Philippines (UP)-Diliman, having taught Public Sector Economics, Microeconomics, Macroeconomics, and Development Economics, among others, for over 40 years. He was also chairman of the Board of Trustees of the Pamantasan ng Lungsod ng Maynila.
Mr. Diokno has also participated in international conferences hosted by international organizations such as the International Monetary Fund, Asian Development Bank, World Bank, Asia-Pacific Economic Cooperation, and the United Nations.
He authored numerous publications and discussion papers regarding his research interests that have been published in academic journals and policy reports. He also wrote the “Core” column in BusinessWorld years ago.
Mr. Diokno finished his Bachelor’s Degree in Public Administration (1968) and his Master’s Degree in Public Administration (1970) and Economics (1974) at the University of the Philippines. He also holds an M.A. in Political Economy (1976) from Johns Hopkins University in Baltimore, Maryland, USA and a Ph.D. in Economics (1981) degree from the Maxwell School of Citizenship and Public Affairs, Syracuse University in Syracuse in New York. — Adrian Paul B. Conoza