drivers of credit costs. in addition, the costs to receive and post payments and service the loan over its life are important drivers of the operating costs of making the loan. in this case of loans made to be held in portfolio, amortized cost is appropriate accounting. the interest received over the life of the loan supports the operating costs to service the loan that are incurred while it is outstanding, as well as credit losses that occur, and the cost to acquire funding for the loan. to the user of financial statements, amortized yield, operating costs, funding costs, and credit quality each need to be visible to the user of financial statements, and be reflected in the period in which they are earned or incurred. fair value accounting and auditing while historical cost accounting methods have well - developed auditing techniques, fair value accounting relies on key assumptions, modeling techniques and judgment. for example, modeling techniques are commonly used in valuing mortgage loan servicing assets. the present value of the estimated future net cash flows of servicing assets attempts to anticipate prepayments of mortgages due to changing interest rates, fees earned from late payments, cost to receive payments and remit funds to investors, costs to handle delinquent and charged - off loans and other factors. changes in the assumptions used in the modeling approach for any instrument or product will change the resulting values. further, the models used for financial statements look to what the market would expect these revenues and costs to be, rather than the firm's specific information. since sales of servicing assets, especially for seasoned loans, is so irregular, it is often difficult to validate the model against actual values seen in the market. thus, auditing model - based accounting requires a high level of specialized knowledge. the auditor must fully understand how modeling or other sophisticated techniques are used to determine fair value, and whether the assumptions used in the models are appropriate, and that the data has integrity. furthermore, “ fair value ” is not always clearly defined or easily determined for some products or instruments. certainly, a non - complex instrument that is highly liquid with an observable market price is easier to value with more precision than a highly complex, illiquid instrument. accountants are being asked to know more than just the proper classification of assets and liabilities, but also the appropriate way to value assets and liabilities. let me mention that the federal reserve supports a fair value - based measurement for assets and liabilities used in the business of short - term trading

in its arsenal of macroprudential tools to ensure the stability of the financial system. these tools will allow the bsp to manage the build - up of systemic risk in the financial system by requiring banks to set aside additional capital as reserves during good times and as buffer for bad times. all of these initiatives would be meaningless if they are not felt by all filipinos. thus, we emphasize the importance of financial inclusion in the country. we have set our sights on digital technology as a catalyst and strategic enabler to ensure that everyone has access to financial services. ensuring that no one is left behind is critical for achieving inclusive growth. let me now highlight the priority legislative measures that the bsp will pursue under the 18th congress. these bills seek to further enhance access to quality financial products and espouse the interests of the general public. these include : the amendments to the bank deposit secrecy laws ; the financial consumer protection bill ; and reforms to agricultural financing which seeks to amend the agri - agra reform credit act of 2009 ( republic act no. 10000 ) and allow banks to merge their loan allocation to the farm sector as a measure to improve banks ’ compliance rate. we will work closely with officials of both houses of congress and other concerned stakeholders as we pursue the enactment of these important legislative measures. let me end my presentation with these key notes : the philippine economy has demonstrated uninterrupted economic expansion for over two decades. this growth is expected to be sustained going forward with sound macroeconomic fundamentals complemented by the government ’ s “ game - changing ” reforms aimed at bridging infrastructure gaps, strengthening our investment profile, and supporting the future of, as the world bank called it, our “ globally recognized competitive workforce. ” however, the external environment has become more uncertain in recent months given trade and geopolitical tensions. nevertheless, we have a resilient external payments position as cushion against global headwinds. the bsp will remain watchful and vigilant, ready and willing to utilize any and all its analytical and surveillance tools at its discretion for any potential risks to its monetary and financial stability objectives. 5 / 6 bis central bankers'speeches as we continue to support the government in its measures to sustain growth, create jobs, and reduce poverty, the bsp will continue to focus on fulfilling its mandate of price stability conducive to a balanced and sustainable growth of the economy. thank you for your attention. i hope that this presentation has given you