Crisis Preparedness Framework II in Philippines
Project Development Objective (PDO)
This project aims to improve the ability of the Financial Stability Coordination Council (FSCC) to manage a possible financial crisis by developing a crisis preparedness framework that provides for working arrangements before and during a crisis.
A Financial Sector Assessment Program (FSAP) completed in 2010 recommended enhancements to the crisis management framework. The FIRST #10094 Philippines: Crisis Preparedness project was implemented in 2011–12. It included a crisis simulation exercise that identified a number of weaknesses in existing coordination arrangements and provided a set of specific recommendations. The Financial Stability Coordination Council was set up to manage a coordinated response among key regulatory agencies. Those agencies include the Central Bank of the Philippines (BSP), the Insurance Commission, the Securities and Exchange Commission, the Philippines Deposit Insurance Corporation, and the Department of Finance. Through the support of FSCC, the proposed follow-up project would implement the main recommendations from the crisis simulation exercise. BSP is to serve as the executing agent for this project.
Those recommendations—based on the results of the crisis simulation exercise—stress the need for more concrete coordination among the authorities. The FSCC was recently created as a primary platform to coordinate the issues of financial crisis management and financial stability. FSCC needs to be supported by detailed procedures on coordination.
The output of the project is a report comprising the following:
1. Specification of crisis management objectives and the roles of the authorities in a crisis
2. Recommendations for improved problem bank and crisis management policies
3. A systemic risk assessment framework
4. A communications strategy
5. Detailed procedures for the FSCC in normal times and in crisis
6. Inventory of crisis management measures
The main expected outcomes of the project are as follows:
1. Coordinated and cohesive response to crisis among financial authorities
2. Minimal costs incurred and reduced impact of a financial crisis
Other short- and medium-term outcomes include the following:
1. Clearer policies for crisis management approved
2. Procedures for coordinating between FSCC members formalized
3. Clearer objectives and responsibilities of authorities
4. Systemic risk assessment framework in place
5. Communication framework in place
6. Improved ability of FSCC to manage a possible financial crisis