The central bank emphasizes that a modern economy also depends on payments system that works-one that supports financial transactions that are ‘fast,secure, and reliable.’
Over the past year, the Bangko Sentral ng Pilipinas (BSP) said it pursued reforms intended to toughen up the fundamentals of central banking: stable prices, a sound financial system and safe and efficient payments.
PRICE STABILITY
With price stability as its primary mandate, the central bank has the duty to prevent prices from rising or falling to help protect the purchasing power and support better financial decision making of Filipinos.
‘When inflation is kept in check, households can manage budgets more effectively, save money with greater confidence, and plan better. Businesses, in turn, are better able to invest, expand, and create jobs,’ the central bank said.
As such, in 2025, the BSP ‘carefully’ adjusted its monetary policy in response to inflation trends and expectations.
The target reverse repurchase (RRP) rate was reduced to 4.50 percent.
By year-end, interest rates on overnight deposit and lending facilities were also lowered to 4 percent and 5 percent, respectively.
‘This timely easing helped stimulate business activity and consumer confidence without compromising inflation management,’ the central bank noted.
The central bank explained that inflation remained ‘benign’ in early 2026 before rising in March due primarily to global oil supply disruptions linked to geopolitical tensions in the Middle East.
In response, the BSP implemented a preemptive 25-basis-point policy rate increase in April and another 25-basis-point in June, bringing the reverse repurchase (RRP) rate to 4.75 percent.
‘The move was meant to anchor inflation expectations and prevent potential second-round effects, or subsequent increases in wages, prices, and inflation expectations following an initial price shock, in this case the spike in global oil prices due to the Middle East conflict,’ the central bank also noted.
In 2025, the BSP said it also actively managed liquidity in the financial system to ensure that market conditions remained aligned with policy goals.
As of December 2025, the central bank said outstanding liquidity placements reached P1.5 trillion, with a greater share shifting to short-term, overnight instruments.
‘Banks used BSP facilities to support lending, meet withdrawals, manage deposit movements, and comply with reserve requirements,’ the central bank said.
Meanwhile, the BSP explained that price stability is ‘further supported’ by a stable external environment.
‘The BSP facilitated private sector foreign borrowings and prudently managed the country’s gross international reserves (GIR),’ the central bank said.
As of end-April 2026, the country’s foreign reserves reached US$104 billion, equivalent to almost seven months of import cover and nearly four times short-term external debt.
FINANCIAL SYSTEM
Beyond price stability, the BSP highlighted the importance of strengthening the financial system ‘against tomorrow’s risks.’
‘A financial system that people can trust-one that remains resilient in the face of shocks, emerging risks, and rapid technological change-is another,’ the central bank emphasized.
This was evident in how Philippine banks continued to grow in 2025, with total banking assets expanding to nearly ?30 trillion, driven by ‘healthy growth’ in loans and investments, the BSP said.
‘This steady expansion reflected sustained confidence in the system and the banks’ continued ability to support households, businesses, and key industries,’ it also noted.
According to BSP, bank credit also grew at double-digit rates in 2025, widening access to financing for households and productive sectors.
‘Loans flow to real estate, manufacturing, trade, utilities, and families-sectors that drive jobs, commerce, and everyday economic activity,’ BSP said.
This expansion, the central bank said, ‘directly supported’ financial inclusion, giving more Filipinos the ability to save, invest, build homes, and grow enterprises.
Moreover, the central bank said BSP-supervised non-bank financial institutions-from electronic money issuers and payment service providers to pawnshops and remittance firms-played an ‘increasingly important role’ in widening access to finance.
‘Digital payments and alternative credit channels helped reach underserved communities, providing lower-cost and more convenient services,’ BSP said.
FUTURE-READY PAYMENTS SYSTEM
The central bank also emphasized that a modern economy also depends on payments system that works-one that supports financial transactions that are ‘fast,secure, and reliable.’
In 2025, the BSP reported that digital payments continued to expand, supported by the quick response (QR) code-based payment ecosystem, particularly QR Ph person-to-merchant (P2M) and InstaPay QR person-to-person (P2P) payments.
‘QR Ph P2M posted 2.5 billion transactions amounting to ?1.2 trillion, reflecting broader merchant acceptance and rising consumer preference for more convenient retail payments. Likewise, InstaPay QR contributed to this momentum with 183.3 million transactions valued at ?926.1 billion,’ the BSP said.
Meanwhile, PESONet facilitated 117.2 million transactions worth P13.2 trillion, supporting higher-value transfers such as corporate, payroll, and bulk payments.
‘Behind these channels, resilience remained a priority. The Peso Real-Time Gross Settlement Payment System or PhilPaSSplus delivered consistently high efficiency, ensuring the timely settlement of large-value interbank transactions and retail payment clearing results,’ the central bank said.
Looking ahead, BSP said it advanced initiatives to prepare the Philippines for an ‘increasingly connected’ payments landscape.
‘The adoption of ISO 20022 messaging standards strengthened data quality and transparency, laying the groundwork for more efficient, interoperable, and future-ready payment systems,’ the central bank said.