Credit cap

Published by rudy Date posted on April 14, 2011

CREDIT CAP: The Bangko Sentral ng Pilipinas stands firm on its position that letting market forces determine pricing serves public interest best and is the most effective way of allocating credit.

This view does not jibe with a number of bills in the House of Representatives seeking to put a cap on credit card interest rates.

In a position paper submitted to the House, the BSP said: “Setting interest rate ceilings will fuel the moral hazard and adverse selection problems that underpin a credit rationing framework.

“These problems are likely to be exacerbated in an economy such as the Philippines since information asymmetry is endemic even under more normal market conditions.”

* * *

COMPETITION: The BSP says in effect that the re-imposition of interest rate ceilings would mean more stringent requirements in credit card applications. Such credit facility would no longer be readily available — and unregulated black market lending could flourish.

Credit cards fall under the category of unsecured loan. Rates are affected not only by the cost of securing the credit facility but also by the cost of refinancing funds advanced as a result of the transaction.

A market-based interest rate policy fosters healthy competition among financial firms, including credit card companies. It does not only attract depositors, it also encourages borrowers to take on debt.

When business responds to market forces, competition sets in. There will not be healthy rivalry once rates are pre-set.–Federico D. Pascual Jr. (The Philippine Star)

July 2025

Nutrition Month
“Give us much more than P50 increase
for proper nutrition!”

Invoke Article 33 of the ILO Constitution
against the military junta in Myanmar
to carry out the 2021 ILO Commission of Inquiry recommendations
against serious violations of
Forced Labour and Freedom of Association protocols.

Accept National Unity Government (NUG)
of Myanmar.  Reject Military!

#WearMask #WashHands #Distancing #TakePicturesVideosturesVideos

Time to support & empower survivors. Time to spark a global conversation. Time for #GenerationEquality to #orangetheworld!

July


3 July – International Day of Cooperatives
3 Ju
ly – International Plastic Bag Free Day
 
5 July –
World Youth Skills Day 
7 July – Global Forgiveness Day
11 July – World Population Day 
17 July – World Day for
International Justice
28 July – World Nature Conservation Day
30 July – World Day against Trafficking in Persons 


Monthly Observances:

Schools Safety Month

Nutrition Month
National Disaster Consciousness Month

Weekly Observances:

Week 2: Cultural Communities Week
Micro, Small, and Medium Enterprise
Development Week
Week 3: National Science and
Technology Week
National Disability Prevention and
Rehabilitation Week
July 1-7:
National Culture Consciousness Week
July 13-19:
Philippines Business Week
Week ending last Saturday of July:
Arbor Week

 

Daily Observances:

First Saturday of July:
International Cooperative Day
in the Philippines

Categories

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.