Recently the idea was floated that the governor of the Bangko Sentral ng Pilipinas (BSP), whose second consecutive term will end in July 2017, should be given a third term. The floating of the idea has generated discussion in many quarters about the management of this country’s monetary affairs since 1949, when BSP’s predecessor, the Central Bank of the Philippines, was established. One aspect of the discussion has been the ideal professional background for the head of the nation’s policymaking institution.
Which profession provides the best training for a first-rate central bank governor? Ought the BSP’s chief executive officer to be an economist? Should he come from the ranks of the nation’s commercial bankers? Do lawyers make good central bank governors? Without passing judgment on the quality of their governorships – an issue that will require at least one separate column – a recital of the pre-BSP professional records of the nine men who have held the position of governor should serve to help provide answers to the questions (1) whether economists make the best governors and (2) whether incumbent governor Amando Tetangco Jr., an economist, should be succeeded by another economist.
Five of the eight past governors went to the nation’s monetary authority following careers in the law, accountancy and commercial banking, and three (including the incumbent governor) rose to the top position through the BSP bureaucracy.
Miguel Cuaderno, the Central Bank of the Philippines’ (CBP) first governor (1946-1962) was a lawyer who co-founded Bank of Commerce. Mr. Cuaderno, who was the first Filipino to take a course at the renowned London School of Economics and Political Science, presided over the installation of exchange and import controls at the start of the 1950s.
Mr. Cuaderno was succeeded by his deputy, Dr. Andres Castillo, an economist, when he resigned in the wake of the Liberal Party’s victory in the 1961 general election.
When the Nacionalista Party was returned to power in the 1965 election, Alfonso Calalang replaced Dr. Castillo as CBP governor. At the time of his appointment Mr. Calalang was president of Security Bank and Trust Co.
When the financial crisis of 1969-1970 broke out, Alfonso Calalang offered his resignation to President Ferdinand Marcos. Rumor had it that IMF (International Monetary Fund) demanded the resignation as a condition for the grant of a standby loan. Whatever the truth, the governor’s position was now vacant.
In place of Mr. Calalang, President Marcos appointed Gregorio Licaros, who was then chairman of the Development Bank of the Philippines. Mr. Licaros, who was a lawyer/CPA went on to be – until then – the longest-serving (1972-1983) governor. In Mr. Licaros’ stead President Marcos appointed one of the CBP deputy governors, Dr. Jaime Laya, a CPA. Dr. Laya resigned amid the scandal surrounding the computation of the Philippine international reserve.
Mr. Laya was replaced by a commercial banker, the president of Far East Bank and Trust Co., Jose B. Fernandez. Mr. Fernandez survived the Edsa Revolution but became a victim of the 1989 military coup attempt.
Another commercial banker, the president of Family Savings Bank and Trust (now BPI Family Savings Bank), Jose Cuisia Jr., replaced Mr. Fernandez. Mr. Cuisia is a CPA.
When Mr. Cuisia resigned, newly elected President Fidel Ramos appointed Gabriel Singson, CBP deputy governor and general counsel, in his place.
When Mr. Singson’s term expired, President Joseph E. Estrada appointed as governor yet another commercial banker, Rafael Buenaventura. Mr. Buenaventura had headed PCI Bank.
And then there is Amando Tetangco Jr., an economist.
This brings me back to the question I posed at the beginning. Which profession provides the best training for a first-rate central bank governor? Economics? The law? Commercial banking? Accountancy?
There is no facile answer to the question. The key to the best answer is (1) to examine the economic environment in which each governor operated and then (2) to determine whether the governor did a recognizably good job under the circumstances.
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