The Philippines sustainable finance effort is making progress. The central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP), initiated the second phase of the Philippines Sustainable Finance Framework last October.
The framework is the Philippines’ long-term initiative that aims to support and promote green banking within the country. This framework is supported by the Bankers’ Association of the Philippines, which commits to help achieve the goals outlined in the framework.
Why Does Financial Sustainability Matter?
Before we delve further, let’s start with the definition. According to the European Commission, the term financial sustainability refers to the process of taking environmental, social, and governance elements into consideration when making investment decisions in the financial sector.
Why does it matter? Financial sustainability matters because several reasons. Firstly, financial sustainability means fewer resources are depleted. This results in efficiency, cost-cutting, and minimized expenditure.
Secondly, it mitigates environmental and social risks. This is beneficial for a country both in the short and long term.
Thirdly, if stakeholders are investing in financial sustainability, they will be provided with future-forward business opportunities in which not only economic but also environmental well-being are emphasized.
Fourthly, financial sustainability ensures well-rounded development. This, in turn, allows for balanced growth both nationally and globally.
The Roadmap of the Philippines Sustainable Finance
The framework is not the only sustainable finance-related project that the BSP is working on. The central bank also works on the Philippines Sustainable Finance Roadmap.
The project was established just recently. Unlike the framework, the roadmap doesn’t deal with the sustainable finance market Philippines directly. Rather, it outlines the necessary principles for developing a sustainable and eco-friendly Philippine economy.
The early establishment of a roadmap will beneficial to the public and private sectors in the long term. Due to being established early on, stakeholders will be better informed of how the government will make policies.
The Role of Online Transactions and E-Money
Online transaction and e-money may play an important role in the Philippines sustainable central bank finance future. The reason is due Philippines citizens have adopted e-money in recent years. This trend is still going and will be going in the foreseeable future.
According to BSP, the annual growth rate of e-money inflow in the Philippines from 2014 to 2018 is 8%. According to YCP Solidiance data, the compound annual growth rate of e-money transactions in the country from 2014 to 2018 is 36%. This number is in terms of usage, inflow, and outflow.
These numbers are impressive. They go to show the current trend of e-money and online transactions. Also, e-money is predicted to become even more prominent in the Philippines in the years to come. Thus, it may play an important role in the financial sustainability of the Philippines.
E-money is mostly driven by mobile wallets and prepaid cards. With e-money, transactions are cashless and therefore paperless. This could improve the carbon footprint of the financial sector, making it more sustainable.
The Philippines sustainable finance will succeed only if the Philippines government and related financial bodies are proactive in involving the public and private sector. The journey to financial sustainability won’t be easy, but the recent developments show promising results.