sharp movements in commodity prices bear some watching if sustained. to date, food prices have been subdued so far, oil has been range - bound but metal prices are still surging. based on a composite index which captures credit conditions in three financial market segments ( banking, securities markets, and exchange markets ), there has been a marked decline in financial stress for advanced and emerging economies since the beginning of 2009. across asia, output growth performance was mixed, with more open economies – such as taiwan and singapore – experiencing the brunt of the global economic downturn. domestically, the story has been that of economic resilience. the slowdown in economic activity in the philippines thus far has been moderate relative to that of some other economies in the region. this resilience has been acknowledged by ratings agency moody ’ s investors service when it upgraded the philippines ’ credit rating by one notch, citing the country ’ s healthy financial system and resilience against the impact of the global recession. the country ’ s outlook was also changed to " stable " from " positive. “ the slowdown in the growth of domestic output to 0. 4 percent, in the first quarter of 2009, was due to lower growth in private spending, coupled with a contraction in exports and capital formation ( year - on - year ). inflation has continued to ease. the slowdown in global demand has led to lower international oil and food prices, which have dampened inflation pressure domestically as well. headline inflation had fallen to 0. 2 percent in july, the lowest since march 1987. this brings the year - to - date average down to 4. 3 percent which is within the target range for 2009. similarly, core inflation, which excludes specific food and energy items to measure broader price pressures, also declined to 3. 6 percent ( july 2009 ) from 6. 9 percent in january 2009. the downward trajectory of inflation was driven primarily by two factors : ( 1 ) base effects due to record - high prices of commodities last year and ( 2 ) relatively subdued demand. this trend may have reached its trough in july, as inflation is expected to rise gradually during the remaining months of this year and the next, but still remain within target ranges for the policy horizon. our external payments position continues to be manageable. the healthy external balance has been supported by steady levels of remittances of overseas filipinos as well as higher services receipts, particularly from business process outsourcing. in turn, this has allowed us

did not have anywhere near as expansive a policy as ours and it did not have the definition of price stability that we have to anchor inflation. its approach to the financial sector was also different, as we have banking union, resolution rules, stress tests, etc. to put it plainly, european supervisors, in particular the ecb, are not going to allow european banks to turn into zombie banks lending to zombie businesses, as was said in the case of japan in the 1990s. q : i understand that you met with syriza, an aspirant party for government in greece. how do you view them as an alternative? a : i would prefer not to make any comments on the political situation in greece. i do believe, however, that the appearance of protests in countries subject to financial assistance programmes [ implemented by the troika ] is the reflection of the huge demands that have been placed on the population. being in a democracy means that people have the right to voice their complaints. yet it is also a warning to leaders that when an economy is undergoing reform, sharing responsibility and effort is key. it is key to both the economic efficiency and political sustainability of the reforms. social protests are there to remind us that we cannot reform an economy by placing all the demands on workers and the most fragile parts of society. q : can the euro survive without debt mutualisation? a : the debate on the future of the euro should not be centred on instruments such as mutualisation. this is in my view the tail that wags the dog. the question to consider is to what extent we should share risk and sovereignty in order to make monetary union sustainable. since the beginning of the crisis we have made a lot of progress in creating various instruments to establish effective solidarity within the euro area, as well as governance that establishes responsibility at a national level. the process is not yet completed. for the euro to be sustainable, we need a stronger framework, particularly in relation to structural reform, where we need a strong and shared decision - making mechanism. fiscal union is part of this debate, but it can only be implemented when there is a sufficient degree of homogeneity between countries and when a mechanism for political responsibility becomes available. fiscal union without democratic control is not possible and is incompatible with democracy. this subject will come up, but not until further down the line. bis central bankers ’ speeches