The Bangko Sentral ng Pilipinas yet again reiterated that the domestic banking system is strong and prepared to withstand possible shocks posed by the collapse of some banks in the US and concerns about the stability of banks in Europe. | RonWDomingoINQ
In banking, a failing bank is made to go through a process called resolution when authorities determine that it cannot go through normal insolvency proceedings without harming public interest and causing financial instability.
In addition, the BSP implements requirements—including the internationally adopted Basel III reforms on capital and liquidity standards—which enable banks to maintain adequate capital and liquidity. The BSP’s latest assertion of confidence also came amid building anxiety about possible contagion sparked by the woes of Credit Suisse, which has been absorbed by its larger rival UBS through a deal brokered by the Swiss government.“This [merger] means [Credit Suisse] is too big to fail,” BSP Governor Felipe Medalla told reporters.
According to the financial supervision team of the BSP’s Supervisory Policy and Research Department, Philippine banks can weather shocks from the debacle in the US because the locals have an asset base that is significantly different from that of the Americans’.Philippine banks also have lower market risk exposure compared to US banks, and losses of local banks are expected to be smaller.
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