Bangko Sentral Is Confronted with a Crisis...

Transcription

1 THE ASIAN FINANCIAL CRISIS: COMMUNICATION RESPONSES OF THE BANGKO SENTRAL NG PILIPINAS Bangko Sentral Is Confronted with a Crisis... Pre-Crisis Philippine Economic Scenario 1 Increasing integration with the global financial market owing to liberalization and deregulation policies 2 Positive economic indicators Economic growth accelerated (to 6.9% in 1996 from near 0 in 1991) Inflation rate decelerated (to 5.1% in 1996 from 18.7% in 1991) International reserves much healthier at $11.5 B Debt service ratio to exports down (to12% from 26%) Exchange rate stable 3 Restored foreign investor confidence Foreign observers dub Philippines as "next economic tiger in Asia" Filipinos upbeat about their country's economic development Communication Risks of the Bangko Sentral ng Pilipinas 1 It is susceptible to adverse public opinion and speculations because of the sensitive and complex nature of its functions 2 Its decisions and actions invite public scrutiny because of their vital impact on the country's economy 3 It is more vulnerable today to crisis owing to a very fluid market brought about by financial globalization and the power of information technology Elements Indicating Crisis in Communication 1 Starts as a surprise Thailand's sudden announcement of a baht float on July 2 posed a threat 2 Threat happens at inconvenient time Eve of BSP anniversary

2 3 months before scheduled exit from IMF supervision 1 day after Philippine credit rating upgraded by US rating agency Country basking in "next economic tiger" status 3 Narrowing alternatives International reserves eroded by peso defense Speculation in currency market unabated and spreading 4 No total control over situation Financial crisis was regional in scope 5 Panic outside BSP Volatility of the currency market Abnormally high volumes of foreign exchange trading 6 Panic within BSP/government Conflicting statements among governement's economic managers BSP staff afraid and unprepared to answer numerous inquiries 7 Scrutiny from outside increasing in intensity as events escalate Over 90% of economic articles currency-related Diverse subjects linked to currency problem Conflicting variety of opinions surfaced 8 Stonewalling Pressure for more information from BSP News blackout from BSP at most critical time (after BSP hiked overnight borrowing rights to record level Communication Factors Directly Contributed to the Deterioration of the Philippine Currency Situation Leakages reported by the press Rumors and speculations on events and developments Intense media reporting and focus Lack of correct and understandable information from BSP 2

3 Bangko Sentral Reacts... Major Considerations in Communication Response 1 Specific provisions of two laws which Provides for greater transparency and openness in public transactions Recognizes as well need to safeguard sensitive information and the dangers of unqualified transparency on certain transactions of the BSP 2 BSP communication office not an appropriate launching pad for the crisis communication because of -- Policies and practices no longer responsive to requirements of current communication environment Limited capability to process and manage information Inadequate experience dealing with tri-media 3 High unpredictability of the financial crisis Communication Strategies 1 Source strategy 1.1 Three spokespersons -- Communication culture-bound Strategic exposure of principal spokesperson Greater openness and accessibility 2.2 Qualities of spokespersons Credibility and competence Experience and relationship with media Communication skills and projection 2 Audience strategy 1.1 Two groups of audiences Primary (market players, bankers, media) Secondary (general public) 3 Message strategy 3.1 No core messages/prepared storyline: "facts speak for themselves" 3

4 Strong economic fundamentals, no cause for panic BSP undertaking measures to stabilize situation; needs cooperation of the banking sector and the public 3.2 Specific messages for specific issues 3.3 Content, length, treatment of message influenced by audience, forum and instrument used 3.4 Prompt announcements and regular updates but no preliminary information 3.5 Consistent messages 3.6 Messages consistent with actions 3.7 Greater appeal to reason than emotion 3.8 Messages presented against a larger perspective 3.9 Focus on public good 4 Channel strategy 4.1 Tri-media as principal channels BSP press corps requirements anticipated, well-coordinated and served Press conferences and press releases staple of media communication 4.2 Special access given by BSP Governor to opinion writers and powerwielders in media 4.3 Maximum use of positive relationship between BSP and media 4.4 Public forum 4.5 Dialogues integral to the resolution of the problem 4.6 Lobbying Strengths of the Communication Response Timeliness and accessibility of info made up for reactive messages Wide audience reach Balance somehow maintained between satisfying intense need of public for information and confidentiality of some info Connection with primary audience very high High probability of BSP messages to be believed Continuing dialogue between BSP and key sectors (e.g., bankers and business leaders) a positive signal to the public of cooperation and their oneness of purpose to resolve the problem Positive relationship with the print media used to the fullest 4

5 Preferential attention given to print media nourished communication with primary audience Weaknesses of the Communication Response 1 Essentially elitist Perspective was always that of the BSP Local dialects/national language rarely used Liberal use of technical information and jargons Channels used not commonly patronized by the greater majority of the general public 2 BSP personnel not tapped as info channels Lessons from the Crisis 1 A crisis cannot be predicted but preparing for it enables the organization to start from a position of strength 2 Do not underestimate the sway of public opinion. Better understanding of the institution and its concerns strengthens public support of the central bank, which comes in handy during inconvenient times 3 A strong public support base helps the central bank maintain its independence 4 Transparency contributes to effective and efficient monetary management 5 Confidentiality shall remain an issue with media 6 A capable and efficient formal communication structure and a good communication plan in the organization are vital for a sustained and proactive correspondence with the public 7 The tri-media have disparate needs, strengths, weaknesses that should be addressed by your communication response Long-term Responses Beyond the Asian Financial Crisis... 1 Transformation of the BSP communication office to be able to address the info requirements of the bank's various publics during normal and abnormal times Reorganization of the office to reflect essential, as well as new and emerging functions and needs (i.e., popularization of information, monitoring and feedback mechanisms, dealing with the press, etc.) 5

6 Improving the office's capability with additional personnel with appropriate experience and skills, a bigger budget, and upgraded information facilities/equipment Review and/or redefinition of communication policies and practice 2 Drawing up a long-term communication plan that is information and educational in thrust Information component to address the higher-level information needs of media as channel, financial institutions and a small segment of the public who understand the business of central banking Education component to raise economic literacy of the greater majority of the public to enable them understand and appreciate what the BSP is doing Media plan to address emerging issues and strengthen linkage with tri-media specially with the broadcast media and the opinion shakers 6

7 The Asian Financial Crisis CO M MUNICATION RESPONSES OF THE BA N G K O SENTRAL NG PILIPINAS BANGKO SENTRAL CONFRONTED WITH A CRISIS... 1

8 PRE-CRISIS PHILIPPINE ECO N O MIC SCENA RIO Increasing integration with the global financialm arket owing to liberalization and deregulation policies Positive economic indicators Economic growth accelerated (to 6.9% in 1996 from near 0 in 1991) Inflation rate decelerated (to 5.1 % in 1996 from 18.7 % in 1991) International reserves much healthier at $11.5 B Debt reserve ratio to exports down (to 12 % from 26 %) Exchange rate stable Restored foreign investor confidence Foreign observers dub Philippines as next econo mic tiger in Asia Filipinos upbeat about their country s econo mic develop ment C O M M UNICATION RISKS OF THE BAN GK O SENTRAL Itis susceptible to adverse public opinion and speculations because ofthe sensitive and complex nature ofits functions Its decisions and actions invite public scrutiny because of their vitalimpact on the country s economy Itis more vulnerable today to crisis owing to a very fluid marketbrought about by financial globalization and the power ofinformation technology 2

9 ELEMENTS INDICATING CRISIS IN CO M M U NICATION 1 Starts as a surprise Thailand s sudden announcement of bahtfloat on July 2 posed a threat 2 Threat happens atinconvenient time Eve of BSP anniversary 3 months before scheduled exitfrom IMF supervision 1 day after Phil.creditrating upgraded by US rating agency Country basking in next econo mic tiger status 3 Narrowing alternatives International reserves eroded by peso defense Speculation in currency m arket unabated and spreading 4 No totalcontrol over situation Financialcrisis regionalin scope 5 Panic outside BSP Volatility ofthe currency m arket Abnormally high volumes offoreign exchange trading 3

10 6 Panic within BSP/government Conflicting statements among government s economic managers BSP staff afraid and unprepared to answer nu merous inquiries 7 Scrutiny fro m outside increasing in intensity as events escalate Over 90 % of econo mic articles currencyrelated Diverse subjects linked to currency problem Conflicting and variety of opinions surfaced 8 Stonewalling Pressure for more information from BSP News blackoutfrom BSP at most critical time (after hiking overnight borrowing rates to record level) 4

11 CO M MUNICATION FACTORS DIRECTLYCONTRIBUTED TO THE DETERIORATION OF THE PHILIPPINE CURRENCY SITUATION -- Leakages reported by the press Ru mors and speculations on events and developments Intense media reporting and focus Lack of correct and understandable inform ation from BSP BANGKO SENTRAL REACTS... 5

12 M A J O R CO N SIDE R A TIO N S IN CO M M U NICATION RESP O N S E 1 Specific provisions oftwo laws (Republic Act 6713 and R.A. 7653) Provides for greater transparency and openness in publictransactions Recognizes need to safeguard sensitive information and the dangers of unqualified transparency on certain transactions the BSP of 2 BSP communication office not an appropriate launching pad for the crisis co m m unication because of-- Policies and practices no longer responsive to requirements of currentcom munication environment Limited capability to process and manage information Inadequate experience dealing with tri-media Inadequate financial and physical resources for a full-blown information campaign 3 High unpredictability of the financialcrisis 6

13 C O M M U NIC ATION STRATE GIES 1 Source Strategy Three spokespersons Com munication culture-bound Strategic exposure of principal spokesperson Greater openness and accessibility Qualities of spokespersons Credibility and competence Experience and relationship with media Com munication skills and projection 2 Audience Strategy Two groups ofaudiences Primary (market players,bankers, media) Secondary (general public) 7

14 3 Message Strategy No core message/prepared storyline: facts speak for themselves Strong econo mic funda m entals, no cause for panic BSP undertaking measures to stabilize situation; needs cooperation of the banking sector the public and Specific messages for specific issues Content,length,treatment of message influenced by audience,forum and instrument used Prompt announcements and regular updates but no preliminary information Consistent messages; messages consistentwith actions Greater appeal to reason than emotion Messages presented againsta larger perspective Focus on public good 8

15 4 Channel Strategy Tri-media as principal channels BSP press corps requirements anticipated, wellcoordinated and served Press conferences and press releases staple of media communication Special access given to BSP G overnor to opinion writers and power-wielders in media Maximum use ofpositive relationship between BSP and media Public foru m Dialogues integralto the resolution ofthe proble m Lobbying STRENGTHS OF THE CO M MUNICATION RESPONSE 1 Timeliness and accessibility ofinfo made up forreactive messages 2 Wide audience reach 3 Balance somehow maintained between satisfying intense need of public for information and confidentiality of some info 4 Connection with primary audience very high 9

16 5 High probability of BSP messages to be believed 6 Continuing dialogue between BSP and key sectors (e.g., bankers and business leaders) a positive signalto the public of cooperation and their oneness of purpose to resolve the problem 7 Positive relationship with the print media used to the fullest 8 Preferential attention given to print media nourished com munication with primary audience W EAKNESSES OF THE CO M MUNICATION RESPONSE 1 Essentially elitist Perspective was always that ofthe BSP Local dialects/nationallanguage rarely used Liberal use oftechnicalinformation and jargons Channels used not com monly patronized by the greater majority of the generalpublic 2 BSP personnel not tapped as info channels 10

17 LESSONS FROM THE CRISIS 1 A crisis cannot be predicted but preparing forit enables the organization to startfrom a position of strength 2 Do notunderestimate the sway of public opinion. Better understanding ofthe institution and its concerns strengthens public support ofthe central bank, which comes in handy during inconvenient times 3 A strong public support base helps the central bank maintain itsindependence 4 Transparency contributes to effective and efficient monetary management 5 Confidentialityshallremain an issue with media 6 A capable and efficientformal com munication structure and a good com munication plan in the organization are vitalfor a sustained and proactive correspondence with the public 7 The tri-media have disparate needs, strengths, weaknesses that should be addressed by your com munication response 11

18 BEY O N D THE ASIA N FINAN CIAL CRISIS... LONG-TERM RESPONSES 1 Transformation of the BSP co m m u nication office to be able to address the info require ments of the bank s various publics during normal and abnormaltimes Reorganization ofthe office to reflect essential, as well as new and emerging functions and needs (i.e., popularization ofinformation, monitoring and feedback mechanisms, dealing with the press, etc.) Improving the office s capability with additional personnel with appropriate experience and skills, a bigger budget, and upgraded information facilities/equipment R eview and/or redefinitions of com munication policies and practices 12

19 2 Dra wing up a long-ter m com m u nication plan that is information and educationalin thrust Information com ponent to address the higherlevelinformation needs of media as channel, financialinstitutions and a smallseg ment ofthe public who understand the business of central banking Education componentto raise econo mic literacy of the greater majority of the public to enable them understand and appreciate what the BSP is doing. Media plan to address emerging issues and strengthen linkage with tri-media specially with the broadcastmedia and the opinion shakers 13