(Article published in the Dec 2, 2009
issue of Manila Standard Today)
Last Monday, Nov. 30, was very Paeng. It was, as he had tried very hard to make his tenure as Governor of the Bangko Sentral to be, plain vanilla, very plain in fact, if that was ever possible. A good central banker, he said in one of his first speeches as head of the country’s central monetary authority, is one who has no extraordinary thing to say.
So was this year’s marking of his passing. Family went about their own lives remembering privately in their own private ways; friends recalling but nevertheless not missing a beat in the rhythm of life they had adopted for themselves; the rest simply enjoying for themselves without feeling in any way indebted to him, exactly as Paeng would have it, for the benefits that he had toiled hard to make easily available for them, individually as well as collectively.
Price stability was the Bangko Sentral’s
primary mandate and so that too was Paeng’s driving passion. As the
experience of other countries show and empirical studies bear out, high and
volatile inflation rates disrupt and distort the way people make their
decisions on the whether, the how, the what, and the extent of their
investments, and the kind of money they spend or save. Erratic volatility
and high rates simply prevent an unfortunate economy from growing as fast as
it should, to the detriment of all those who populate it, with those having
the least suffering the most. Keeping prices stable is thus a categorical
imperative for economic managers and was for Paeng, heading as he did an
institution uniquely positioned to make it happen, a personal mission.
From the many hours I spent with Paeng both at work tables poring over documents while testing legal stances and riding atop the waves that are crushed against the sandy coves of Batangas by the habagat or gently sent forth to the South China Sea by the amihan, I cannot help but liken his regard for his job’s stock-in-trade as a resource to be treated like drinking water.
In the first place, money, like water had to be kept in clean reservoirs. Thus, Paeng actively sought the passage of the Special Purpose Vehicle Act (R.A.No. 9182) which gave banks incentives to clean-up their balance sheets as well as of laws enhancing the regulatory and supervisory powers of the Bangko Sentral to ensure that the keepers are able to make sure that the cisterns remain clean. When danger lurked at the Urban Bank, Paeng took the drastic measure needed to avoid contagion of the system.
The water itself Paeng kept free from contamination by criminals. He shepherded the establishment of the current anti-money laundering regime. Initially set up in 2001 with the adoption of R.A. No. 9160, Paeng quickly sought to strengthen it when Financial Action Task Force found the original version of the law inadequate. Effective legislative lobbying by Paeng warded off the severe counter-measures the country would have had to suffer had the law not been amended on time. Today, Vic Aquino, the Anti-Money Laundering Council’s executive director, is a constant resource person at international conferences designed to spread Filipino know-how to properly run an effective anti-money laundering regime.
Money, like water, is useless unless it is delivered to those who need it. Big corporations and institutions who need money have their own groups and methods that enable them to tap into the spring. But Paeng was very well aware that there remained sectors in society who needed money as badly as the affluent but did not have the latter’s resources and thus were forced by circumstances to accept the cruel rates of exploitive money lenders. Thus, he pushed for micro-finance, directing substantial credit flow to those who ordinarily would not even be let in by the security guards manning the doors of the banks’ lobbies. “Unless we provide credit to the poor, we will never lick poverty in this country,” Paeng was often heard to say.
And since like water, money too had to be sold and bought, Paeng made sure that the price that people paid for it was determined in an open way. Paeng got the banks to organize their money market. Instead of the previous system of secret negotiations conducted over the phone by those who have and those who need funds, he got the banks to set up a money exchange akin in concept and operation as the stock exchange. Thus, PDEx was born.
The Philippine Dealing and Exchange Corporation stands today as a monument to Paeng’s prodding (not to gentle at times) of the banks to set up an efficient and centralized infrastructure for trading money instruments. The structure must provides full price discovery, adequate transparency and effective investor protection. Gone are the days when people who placed their money in the money market never knew (and had to be content with guessing and comparing notes with their comadres and compadres) whether the rates they are getting for letting their banks use their money were fair and objective. Today, participants in the market get live bid-and-offer quotations, timely transaction data, and, for those who are more sophisticated financially, real-time fixed income market information on a subscription basis.
Government interference in the market is reduced to the minimum. As a self-regulatory organization, duly licensed by the Securities and Exchange Commission, it is authorized to see to their own members’ compliance with the law as well its own rules and regulations.As ca n be expected in situations like Paeng’s, the Filipino crab cannot be too far away. Text messages have been circulating recently announcing the launching, in a few days by some in whose interest it is to turn back the clock, of an effort to bring back the banking and financial system to the Neanderthal age. I am sure Paeng from his nook somewhere amongst the stars would not permit that effort to undo his work. Just as I am sure too that those who remembered him last National Hero’s Day would do their best to show their mentor up there their fidelity to his ideals.