we should rely on historic experience for analyzing today's management challenge. with continuing innovation in loan products and heightened competitive pressures, risk profiles will not be identical to those of earlier cycles, and it would be unwise to rely too heavily on these past patterns without careful analysis and management. financial institutions and financial regulators rightly spend a fair amount of time and energy monitoring economic conditions as they seek to better understand the growth opportunities that exist and the outlook for the quality of the loans being made. let's turn that around for a moment and ask the question : what can indicators of asset quality at financial institutions tell us about where we are in the business cycle? the question is an interesting and timely one, given that many in the industry believe that credit quality is about as good as it can get. at the federal reserve, we've recently looked at measures of asset quality - problem assets, chargeoffs, and provisions for loan losses - and related them to the economic cycle, measured as growth in real gross domestic product. the usual way to look at cyclical indicators is to line up the high points and low points - or " peaks " and " troughs " in the specialized language of business cycle analysts - and see how they compare with each other. it is usually helpful to screen out normal seasonal variations, so that one ends up with a cycle that unfolds smoothly over several years. let me refer now to the exhibit we prepared for you. it contains two charts that compare changes in gdp with aggregate problem - asset ratios for commercial banks and credit unions respectively. upper chart shows quarterly data for commercial banks ( the blue line ) since 1990. the lower chart shows delinquency rates for all credit unions ( the blue line ). this chart uses a semiannual frequency because that was the regulatory filing frequency for many credit unions through much of this period. the first conclusion we can drawn from the data is that asset quality is a lagging indicator of what is happening in the economy at large. this idea has intuitive appeal and is probably consistent with your business experience. in a nutshell, when economic conditions deteriorate, the ability of many borrowers to service their debt erodes in turn, along with their cash flow. more generally, we know that a recession is a period in which economic activity declines. speaking broadly, a recession begins when gdp starts declining, and it ends when gdp stops declining. the end of a recession is usually termed the low point or " trough

eli m remolona : message for the annual reception for the banking community keynote message by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2024 annual reception for the banking community, manila, 10 january 2025. * * * good evening, everyone. former central bank governors, members of the monetary board, partners from the banking and diplomatic community, government officials, friends from the media, ladies and gentlemen, happy new year! first of all, congratulations to all of you and thank you for a milestone - filled 2024. it has been a remarkable year and i am truly grateful for the hard work that each one of us has put in. indeed, we have much to celebrate. we received from s & p ( global ) an upgrade in our credit rating outlook. with your help, we launched the peso irs ( interest rate swap ) market, and we took significant steps to expand the government repo ( repurchase ) market. we also rolled out the financial services cyber resilience plan and helped pass the anti financial account scamming act. in the midst of all these, we also began circulating the new smarter, cleaner, and stronger polymer banknotes. the year 2024 also happens to be the 75th anniversary of central banking in the philippines. please join me in applauding the services of bsp employees, the current ones, as well as those who served before them, some of them are here with us today. we also have some new faces among us, including two members of the monetary board, walter wassmer and jose querubin. their perspectives have already proven to be very helpful. as we look ahead to 2025 and beyond, i am thrilled to continue working with you to build on our shared successes. let us continue working together on digitalization and financial inclusion. let us also intensify our efforts on open finance to ensure that people can choose financial services that best suit their needs. having worked with many of you over the years, i know that we share the same goal, and we share the same drive to make the banking industry a stronger engine for jobs and growth for the filipino people. let me now call on my fellow members of the monetary board to join me on stage for the ceremonial toast. 1 / 1 bis - central bankers'speeches