- in capital ( php46 billion ). to top it all, our u / kbs appear to be purposely leaning on the side of caution. the account “ cash and due from banks ” has significantly increased. since end 2012, u / kbs have recorded an increase of php867 billion or a staggering annualized growth of 37 %. reforms : how strength can be further enhanced as these numbers validate, there is definitely every reason to believe that we are in a position of strength and finding ways to sustain it. this is a feather on our cap. but we also must be circumspect enough to accept that strength is neither absolute nor eternal. financial markets continuously evolve and the same position of strength can be a marked weakness at another time and under different market circumstances. this is why the bsp has made it clear that we support the principles underlying the espoused global reforms. we believe that there is reason to the global reforms. but we are open to both the timing and execution of the reform details. bank capital – the very core of banking supervision principles – must always have the capacity to absorb losses from risk taking behavior. these are no longer from your plainvanilla credit, market and operational risks. instead, we need to be more cognizant of such issues as liquidity pressures, excessive leverage, interconnectedness, and the bar of governance applicable to each entity with a public franchise to operate as a bank, including and especially for those which are deemed systemic by virtue of their operations, market reach and the unique products and services that they provide. these are all enshrined in the basel 3 reform agenda. and while we support the basic prudential intent of these reforms, we have also been very deliberate in our roll out of the reform components. within the asean - 5, we were the last to implement the capital reforms for basel 3. to - date, we have issued exposure drafts for the treatment of counterparty credit risk, domesticallyoperating systemically important banks, the data aspect of otc derivatives and of leverage. and while the exposure draft for liquidity risk has yet to be issued, this too has been simulated, much like our prior efforts on capital, d - sibs and leverage. apart from the global reforms, we have quite a bit in the pipeline for things that we consider home - grown issues. it is a long wish list, and i shall not go through each of them here. i am fully

amando m tetangco, jr : convergence in a divergent world speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the aci phils - fmap - ihap - mart - toap joint general assembly, makati, 23 september 2014. * * * introduction last time i addressed your general assembly, i did a little “ word association ” game with you. i don ’ t know how many of you recall that, but i did that last year to highlight the fact that often, the same words we hear have different meanings to us. often, this is so because of our individual “ positions ” in the market. in other words, that adage “ where we stand depends on where we sit ” is very true among you. last time, i highlighted the bsp ’ s desire to get everyone on the same page, wherein the same words would mean the same thing. because clearly that ideal situation of common understanding makes for more effective and efficient bsp policy implementation. this year, i will not do that game anymore. rather, let me focus on just two words. can anyone hazard a guess as to what these two words would be? any guesses? the first word the first word is divergence. i chose this word because of late, it has become quite an important word that describes some of the remarkable features of the current global economic environment. first. divergence in the growth paths among major economies. we have seen that in the us there continues to be a sprinkling / sputtering of positive economic indicators, while both the eu and japan are still struggling for their economic growths to gain traction. second. divergence between the current growth path of emerging market economies and the previous forecasts for the growth path of these economies. eme growth has broadly slowed down from the earlier anticipated growth trajectories. together, these two “ divergences ” have important implications for the speed and manner of global growth rebalancing and policy normalization. third. divergence in the monetary policy stances among the aes. major central banks ’ policy rates have remained at historic lows. but while the fed has kept the phrase “ considerable length of time ” in its statement, it raised its expectations on the future path of the target rate ( i. e., those infamous dots ). it also reiterated its