PARIS—With the Philippine economy rising, why not “globalize” the peso?
President Benigno Aquino III said he got this “shocking” suggestion from an international banker he met in one of his business meetings here.
Breaking the news before a gathering of Filipinos Wednesday night (1:30 a.m. Thursday in Manila), the President said he asked Finance Secretary Cesar Purisima to study the proposal, which Aquino found surprising by his own standards.
“I thought I was a bit difficult to surprise. But I was shocked when this big bank [executive] told me that we should ‘globalize’ the peso,” he said in a speech at the Chapelle Sainte Bernadette.
“Never had I thought that anyone would ever make such a suggestion, believing that the Philippines is in such a good shape that he would be willing to invest in our currency because he believes in the stability of our economy.”
“Internationalizing” the local currency would allow non-residents to transact in peso and exports can be invoiced in the same currency, reducing foreign exchange costs. Government can also issue peso-denominated debt overseas more competitively.
An internationalized currency “offers new profit opportunities to private sector financial institutions, although this benefit may be offset in part by the entry of foreign financial institutions into the domestic financial market, to the extent that the government permits it,” according to the late international economist Peter Kenen.
But it could also “pose new risks to the domestic financial system due to the issuance of foreign debt to a country’s residents.”
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