The Financial Stability Coordination Council (FSCC) held its quarterly meeting at the Bangko Sentral ng Pilipinas (BSP) head office in Manila on 20 May 2026. There, the council flagged risks to the Philippine financial system but also noted that the banking sector remains resilient.
Among the risks cited were the ongoing Middle East war, vulnerabilities in corporate debt, and rising household debt.
On the Middle East conflict, the FSCC noted that a prolonged war in the region could push oil prices higher. It could also weaken market sentiment, tighten financial conditions, and drag on both global and domestic growth.
“Geopolitical risks remain a key source of uncertainty. We are watching global developments closely to spot and address potential systemic risks,” said BSP Governor and FSCC Chairman Eli M. Remolona, Jr.
On corporate debt, the FSCC flagged exposures to energy- and interest-rate-sensitive sectors as areas to watch. Higher energy costs and tighter financing conditions could raise debt-servicing burdens and compress firm margins. That, in turn, could affect bank asset quality. The Council also noted that rising bond yields could lead to valuation losses on banks’ securities holdings. If market pressures persist, this may affect capital buffers.
On household debt, the FSCC sees the need to closely monitor borrowers’ ability to pay loans.
The Council remains alert as borrowing costs rise and debt levels for both the household and corporate sectors continue to grow.
“We see pockets of vulnerability in energy- and interest-rate-sensitive sectors and in valuation pressures from higher bond yields. Nonetheless, the financial system remains on a solid footing. Banks have adequate capital and liquidity buffers to absorb shocks and keep lending to households and firms,” explained Governor Remolona.
The FSCC is also strengthening oversight of non-bank financial institutions (NBFIs). These include quasi-banks, investment houses, non-stock savings and loan associations, pawnshops, and trust corporations. The Council is also working to improve how it monitors system-wide risks and interlinkages.
The FSCC is composed of the BSP, Department of Finance, Securities and Exchange Commission, Insurance Commission, and Philippine Deposit Insurance Corporation. PR
