On the other hand, if policymakers find that market participants have become excessively risk-averse, they would be called upon to restore confidence in the market. The basic principles are simple: Don’t be so lenient when things are booming, and don’t be so restrictive when things turn sour. Here, coordination of monetary and macro-prudential policy is necessary, and very effective.
The Credit Surety Program brings together well-managed and wellcapitalized cooperatives with local government units and other donors to provide surety cover, in place of collateral, to guarantee MSMEs’ bank loans. The Credit Surety Fund operates at the provincial level and has been launched in Cavite, Aurora, and Bohol. I am happy to report that more provinces have expressed interest in joining this CSF program.