As Europe and the US face increased financial market difficulties, the feedback loop will take the Philippines through episodes of volatile capital flows, adjustments in liquidity, stresses in credit underwriting – all of which could affect economic growth. Ladies and gentlemen, this simply highlights that the challenges in offshore markets should be onshore concerns.
Eliminating the too-big-to-fail assumption by making resolution of systemically important financial institutions a credible option lies at the core of the solution. Finally, there was also problems in the management culture of banks.