Financial System in the

Philippines
Financial System in the Philippines
- At the core of the Financial System is the banking system. It is the
banking system that provides essential financial products and
services.
- As of the end-December 2019, the impact of COVID-19 is yet to be felt
in the financial system but the preparedness of the Philippine
financial system will withstand such unforeseen shocks to the system.
- The country’s macroeconomic environment was conducive for the
sustained growth and dynamism of the banking system in 2019. The
Philippine economy continued to be a strong regional performer.
Financial System in the Philippines
- Against this sound macroeconomic and policy environment, the total
resources of the banking system continued to expand, particularly the
lending and investment portfolio, to support the country’s financing
needs.
- Common lender channel underscores the importance of diversifying
sources of external financing to reduce vulnerability to common lender
problem. Common lender channel is a mechanism that facilitates the
spread of financial shocks around the globe.
- It highlights the necessity of developing an effective cross-border
prudential supervision cognizant of the increased presence of foreign
banks in some domestic banking system.
Financial System in the Philippines
- It outlines the importance of financial supervisors taking steps, directly or
thru regulated entities, to ensure that banks has adequate risk
management processes in place to manage group-wide risk
concentrations and reduce vulnerability to common lender problem.
- Asset growth was funded by deposit generation, bond issuances and
capital infusion. Deposit liabilities continued to be the primary funding
source of the banking system.
- Foreign currency deposits coming from deposits and bond issuances are
used to service the payment and settlement requirements of the country
and to lent to clients requiring higher FX-denominated working capital
requirements
Financial System in the Philippines
- Part of the financial system in the Philippines are the non-bank sector
such as the Government non-bank financial institutions, credit card
companies, non-stock savings and loans associations and investment
houses, including pawnshops and money service business.