Implications of an RP-US FTA on the Philippine financial services industry and the Philippine economy

Implications of an RP-US FTA on the Philippine financial services industry and the Philippine economy

The Philippines to remain competitive in the dynamic finance world has introduced reforms into its financial system. In the 80s and 90s, the Philippine financial system underwent reforms covering the banking industry, financial markets and insurance to promote a liberalized environment. In the Philippines, government regulators introduced various policy reforms in the 1980s that provided a greater role for market forces, higher bank capitalization and better bank supervision. With the regula tory framework being continuously examined, there was already a relatively high degree of market orientation in the financial system that helped parry the effects of the Asian financial crisis.

The paper discusses financial liberalization in the context of a proposed RP (Philippines) -US FTA. It discusses the state of the financial industry, in general, and also reviewed the US-Chile and US-Singapore FTAs to be able to arrive at the proposed provisions for the RP-US FTA. It also tackles the reforms that have to be undertaken in order to make the Philippine Financial Services Industry globally competitive and be more prepared to embrace the opportunities of an FTA with the US.