President Marcos is on the verge of making a crucial economic appointment, one that may be even more significant than choosing a finance secretary. This decision involves selecting the individual who will lead the Bangko Sentral ng Pilipinas (BSP) and consequently impact the value of the country’s currency for the next six years. As the current central bank head’s term is coming to an end, President Marcos must navigate through intense lobbying efforts both internally and externally. However, as he evaluates the qualifications of each candidate and considers the influence behind them, it is crucial for the President to remember the true role of the central bank, articulated by William McChesney Martin Jr., the former head of the United States Federal Reserve. Martin believed that central bankers must protect citizens’ purchasing power by curbing economic growth, which can lead to inflation. To fulfill this mission and maintain independence from the executive branch, President Marcos has an opportunity to establish a lasting legacy by ensuring the central bank’s freedom from fiscal and political interference. Outgoing BSP Governor Felipe Medalla demonstrated qualities such as independence and transparency during his tenure, dedicating himself to restoring the bank’s autonomy. While Finance Secretary Benjamin Diokno prefers an economist as the next BSP governor, there is no reason to disqualify bankers from consideration. In fact, several successful central bank governors in the Philippines were bankers who excelled in times of crisis. Amidst the plethora of advice he is receiving, President Marcos must select a governor who will act against conventional wisdom and make decisions based on the country’s best interests. That means appointing someone who will lower interest rates during weak economic periods and raise them when the economy is strong. The central bank’s mandate is to maintain price stability, enabling balanced and sustainable growth and employment. This requires an independent central bank and a governor free from political patronage.
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