Steering the country towards inclusive prosperity

Much and more is expected of Eli M. Remolona, Jr., the person appointed by President Ferdinand R. Marcos, Jr. to serve as the newest governor of the Bangko Sentral ng Pilipinas (BSP) for the next six years.

For the past few years, particularly following the coronavirus outbreak, the central bank had a key role in meeting the challenges of maintaining the country’s economic momentum while protecting it from the worst of the pandemic’s impact.

The administration of his predecessor, Felipe M. Medalla, has largely been responsible for steering the country away from the economic slump affecting most of the world. Mr. Medalla took over the monetary authority to complete the previous governor Benjamin E. Diokno’s unfinished tenure after he had left the position to assume the role of Finance Secretary.

Since then, the BSP has had to contend with skyrocketing inflation by keeping the most aggressive monetary tightening cycle in years. The key policy interest rate currently sits at 6.25%.

To this day, the BSP considers inflation as one of the biggest challenges the country is facing considering its impact on the economy.

“Our challenge now is inflation. Fortunately, the BSP’s inflation-targeting framework has served us well in the face of unusual supply shocks,” Mr. Remolona said in a briefing after the President’s State of the Nation Address.

“We continue to focus on our mandate of price stability and have dedicated our resources and attention in pursuit of this goal,” he said.

According to data from the Philippine Statistics Authority, from a peak of 8.7% in January 2023, inflation decelerated in the succeeding five months settling at 5.4% this June, the slowest in 13 months.

“Our models tell us that inflation will be within the target range of 2 to 4 percent by the fourth quarter of 2023. This is the range that we think is ideal for an economy like the Philippines when it is growing at full capacity,” Mr. Remolona said.

Mr. Remolona attributed much of these gains to the strong banking policies implemented during the pandemic, and stressed the importance of sustained policy improvement for the banking sector moving forward.

“Unlike in previous crises, our banks formed part of the solution rather than part of the problem. This is, in part, due to our work in ensuring financial stability,” he said.

Increases in bank capitalization and modifications to capital ratios are two examples of such improvements that have helped fortify the banking sector. To stimulate economic activities and buoy domestic economy during the pandemic, the BSP also permitted banks to lend to micro, small, and medium enterprises (MSMEs) as alternative compliance to their reserve requirements.

“Fortunately, the BSP’s inflation-targeting framework has served us well in the face of unusual supply shocks. We continue to focus on our mandate of price stability and have dedicated our resources and attention in pursuit of this goal,” Mr. Remolona said.

He restated the central bank’s expectation that inflation will slow further in the fourth quarter of this year and fall back within the government’s 2%-4% target band.

“This is the range that we think is ideal for an economy like the Philippines when it is growing at full capacity,” he said.

The digitalization of financial services in the country, which has also been a primary objective of Mr. Medalla’s administration, have helped boost the efficiency, competitiveness, and financial inclusion in the country.

Mr. Remolona said authorities “are mindful and we will manage the attendant risks to ensure continued trust and confidence in this increasingly digital economy.”

“We want to bring more Filipinos into this financial fold, so that as many of us as possible can share in the fruits of economic progress,” he added.

Expertise through experience

Fortunately, Mr. Remolona has had a long career in the industry to rise up to the challenges of steering the economy towards such a goal. Before he took his office, he sat on the seven-member policy-making Monetary Board.

“With his extensive experience and remarkable achievements in central banking, economic policy, international finance, and financial markets, Mr. Remolona brings a wealth of expertise to his new role,” the Presidential Communications Office said in a statement.

“His appointment ushers in a new era for the central bank, with great anticipation and confidence in his ability to steer the Philippine economy toward sustained growth and stability,” the office added.

Part of this experience was a total of 33 years spent at the Federal Reserve Bank of New York and the Bank for International Settlements (BIS). Mr. Remolona had previously replaced Mr. Medalla on the Monetary Board when Medalla was appointed governor of the central bank last year.

He was also the chair of the Risk Management Committee and an independent director of the Bank of the Philippine Islands prior to joining the BSP.

Throughout his career, Mr. Remolona has worked as a consultant for esteemed institutions such as the Asian Development Bank (ADB), the International Monetary Fund (IMF), and the World Bank.

Mr. Remolona also served as a Professor of Finance and Director of Central Banking at the Asia School of Business in Kuala Lumpur, in collaboration with the MIT Sloan School of Management, from 2019 to 2022.

He also taught at Williams College, Columbia University, New York University, and the University of the Philippines-School of Economics. He taught courses on monetary policy, money and capital markets, and digital transformation, contributing to the education and development of future finance professionals.

As the BIS regional director for Asia and the Pacific from 2008 to 2018, he worked closely with the 12 top central bank governors in the region to develop policy on topics like financial regulatory reform, the growth of capital markets, and financial stability. He also oversaw BIS reserve management for Asia-Pacific central banks.

In 1972, Remolona began his career in economics by working for President Marcos, Jr.’s father and namesake in the role of economist on the Presidential Economic Staff and Development Management Staff of the Executive Secretary Alejandro Melchor.

In addition, he went on a business expedition to the Philippines to offer the late Marcos senior advice on how to improve the country’s economic foundation.

As Mr. Remolona shared during BSP’s 30th anniversary and turnover ceremony, the central bank’s next moves forward will stress two points, namely building on the progress the central bank has already made and improving the work they have been doing.

“I know we’re all eager to work even harder. I know we have what it takes to do even better — especially if we work together,” the governor said in his speech. — Bjorn Biel M. Beltran