In fact, markets can worry so much about incentives that they stop providing insurance altogether – in this case markets can freeze-up. And indeed, we have experienced numerous quasi-market freeze-ups in various segments of the interbank, credit and sovereign debt markets. 7 When this happens, it is time for the public sector to step in.
Pending organization of the Central Governing Body, you - initial members of the Philippine RMB trading community - have voluntarily sought to enter into a binding agreement setting a framework and the scope of the RMB Market. We at the Bangko Sentral ng Pilipinas commend and support you in this meaningful initiative.