Page 266 - Special Topic Session (STS) - Volume 3

STS543 Veronica B. B. et al.
need for comprehensive, centralized and reliable credit information system is
indeed a significant development. The main purpose of the Corporation is to
strengthen the submission of basic credit data, both positive and negative
credit information in the entire data subject provided by submitting entities.
Nevertheless, the study’s findings have important policy implications. First,
the finding that tightening domestic macroprudential policies are effective in
reducing growth of real bank loan commitments underscores the critical role
for structural policies to enhance the capacity of the economy to cope with
volatility, along with improved regulation and supervision of the financial
sector. Second, given the influence of real effective exchange rate appreciation
in driving growth in real loan commitments, there is a need for more in-depth
understanding of exchange rate dynamics, its impact on the economy and the
effectiveness of policy instruments, both in the short and longer term, as well
as the risk-taking channel of currency appreciation.
Third, an important point to consider is the role of domestic
macroprudential measures on cross-border issues. The cross-border effects
of prudential measures can be both positive and negative. The positive effect
concerns the public good aspect of financial stability, wherein actions
enhancing financial stability in one country also benefit others. Policies that
prevent the build-up of systemic risk in one jurisdiction may reduce the
probability of crises that subsequently spread elsewhere. And fourth, the
finding that tightening of domestic macroprudential policies restricts risk-
taking activities by banks underscores the role of bank supervision and the
resulting microprudential policy in managing risks to banking stability in the
Philippines. Importantly, the BSP, cognizant that a “one size fits all” framework
is not appropriate for all banks, adheres to the principle of proportionality in
the adoption and application of certain prudential regulations.

References
1. Bayangos, V. (2017), “Capital Flow Measures and Domestic Macro
Prudential Policy in Asian Emerging Economies: Have These Been
Effective?” Bangko Sentral ng Pilipinas Working Paper Series No. 201701,
June.
2. Bruno, V, I Shim and H Shin (2017): “Comparative assessment of
macroprudential policies”, Journal of Financial Stability, Vol 28, pp 183 –
202, February.
3. Bruno, V., I. Shim and H.S. Shin (2015), “Comparative Assessment of
Macro Prudential Policies,” BIS Working Paper No. 502, Bank for
International Settlements, June.
4. Chavan, P. and L. Gambacorta (2016), “Bank lending and loan quality:
the case of India”, BIS Working Paper No. 595, Bank for International

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