[Welcome remarks at the inauguration of the Center for Financial and Monetary Economics, 16 September 2016.]

Senior officials of UnionBank who are here, in full force, to show their support, led by the bank’s chair, Mr Justo Ortiz; president and CEO, Mr Edwin Bautista; EVPs Mr Genaro Lapez and Ms Mary Joyce Gonzalez;

Our dear Mr Vic Valdepeñas, former head of UnionBank, who in a way fathered the center we are launching today;

Our beloved dean, Dr Orville Solon;

Monetary Board member (former dean) Phillip Medalla;

Budget Secretary Dr Ben Diokno;

Esteemed guests from government, the private sector, and the academic and research community;

Fellow UP School of Economics alumni, who took time out of their busy schedules to join us in our celebration;

And of course, our students and faculty, for whom this center was built;


Thank you very much coming, for braving the horrible Friday traffic, and joining us today as we launch the UPSE UnionBank Center for Financial and Monetary Economics. This center has been on the drawing board for far too long, since 2010 to be exact, and we are delighted to finally be able to unveil it to you today. By we, I mean the faculty and staff of the UP School of Economics, and most especially the members of the School’s financial economics committee which runs our newly created financial economics program, a committee which I have the honor of representing today.

While the center is a new creation, many of the people behind it are pillars of economic research and education in the country including our former dean, Dr Emmanuel de Dios (who sends his apologies for not being able to be here today); Dr Corina Gochoco-Bautista, who until a couple years ago was senior adviser to the Chief Economist of the Asian Development Bank; former NEDA director-general, Dr Emmanuel Esguerra, who just recently rejoined us after turning over a healthy economy to our new president, President Rodrigo Duterte, who hopefully can keep the economy healthy; Dr. Renato Reside, who heads our graduate program and is very active in the policy circles when it comes to finance and taxation; and the new blood who are expected to power this center forward with their research such as Dr Sarah Lynne Daway, a macroeconomist who studied in the US and is now imparting what she has learned to her students, and of course myself, though Professor Daway might complain because she is no doubt much younger than me. I am including myself in the junior category because I am still quite young in this arena having been an 18-year (quote-unquote) “old hand” in the field of journalism and financial investment consultancy before joining the academe.

The idea to build a Center for Financial and Monetary Economics began way back in the late 1990s, after the Asian financial crisis in 1997-1998, which ravaged the region and highlighted the need for a serious rethinking of the role of the financial sector in the economy. The UPSE faculty found an ally in Mr Valdepeñas, then president and CEO of UnionBank, who had a rather unique view of the crisis, of its causes and consequences, emphasizing what he called the “new risk dynamics” in a more liberalized and globalized financial environment. He viewed the 1990s as a time when Asian companies took unusually large foreign exchange and interest rate risks as they availed of liberally priced debt and equity financing, particularly in foreign currency, which eventually led to a huge corporate debt overhang that only worsened because of traditionally applied macroeconomic tools (such as interest rate hikes and sharp currency depreciations). The new set of financial, monetary, and economic realities, he believed, called for a new regulatory structure, and especially a new risk management structure that could help our financial regulators better manage the process of globalization and liberalization and maintain financial stability.

Ten years later, in 2008, what he said about financial and economic systems and the need to understand financial risks as they evolved could not have been truer, as a global financial crisis that began because a few unmonitored instruments swept through financial markets in advanced economies beginning in the US. For the academic and policy community, clearly, if the goal was to preserve economic stability and nurture growth of the real economy, the research agenda had to be broadened in such a way as to incorporate the finer realities of finance into macroeconomics, especially investigating the behavior of financial market players and identifying ways to allow them to innovate without destabilizing financial system and the greater economy. For the teaching institutions like UP, particularly UPSE, meeting the broader goal of a stronger financial system and economy meant enhancing the university’s ability/capacity to develop the human capital needed by financial institutions as well as government, by training economists who are keenly aware not only of profitable opportunities but also of the systemic/financial and social risks. For this purpose, Mr Valdepeñas was convinced that a corps of bright young people with a solid background in economics, combined with thorough grounding in tools of quantitative finance and econometrics, was indispensable.

These, in short, are the reasons why the financial economics program was born and its flagship CFME created—to fill the need for deeper research that focuses on financial markets and institutions and their role in the economy, and the need to produce a greater number of graduates with adequate training in financial economics—both for the end purpose of keeping our financial system healthy and our economy running smoothly. This is also why we are extremely happy to feel the support of our country’s financial regulators and the financial community, who are well represented here today (e.g., MB member Dr Medalla and Francis Dakila of BSP, Ephyro Amatong of SEC). In the dance between the regular and the regulated, we believe an independent (third) view is vital, and unbiased evidence-based analyses and opinions are what we here in the academe continually strive for and hope to deliver.

Our vision for the center is therefore this (and this is big)—to eventually become an internationally recognized center for research and education in financial and monetary economics that can stand proudly beside similar institutions in the Asian region, especially as we move forward towards greater financial integration. A higher university ranking for UP, of course, is not such a bad outcome. We also envision it to be a place where academics and researchers, economics students, and financial practitioners, both in government and the private sector, can interact and learn from each other.

That’s it for an overview of the center. I will not keep you much longer so that you can listen to the next set of speakers, who are the reason why we are all here today. Again, welcome, and thank you for coming. Let me turn you back now to our emcee, Dr Agustin “Oggie” Arcenas, the head of UPSE’s public affairs committee, to give a more formal introduction of our special guest.