to use different methods to allocate rrps to participating banks, including possibly an auction system. in turn, the option to auction rrps will give the bsp the means to implement a full interest rate corridor for omo in the future. presently, our omo is conducted with the rp as the ceiling and the sda as the floor. the electronic reporting of transactions will also expedite the calculations for another important initiative in progress – the ois, which is a determinative component in completing the benchmark yield curve. we can see, therefore, some interesting times ahead. we look forward to continue working closely with the leaders of our financial system in building financial market infrastructure and systems that are safe, secure and responsive to its stakeholders. thank you for your continuing support. finally, let us congratulate the bsp ’ s treasury department under the leadership of assistant governor winnie santiago who worked with the bsp ’ s payments system office, information technology sub - sector, and legal office in setting up this trading platform. bis central bankers ’ speeches we look forward to more joint undertakings that will continue to move us forward toward a better, bigger and stronger financial market that will keep our economy growing and increasingly inclusive. thank you all and mabuhay! bis central bankers ’ speeches

their fx obligations, resulting in further improvements in the country ’ s external debt ratio. as of end march 2008, the external debt ratio stood at 35. 6 percent, less than half its level in 2001 of 72. 9 percent. the peso has weakened in recent months. on a year - to - date basis, the peso depreciated against the us dollar by 12. 3 percent as it closed at p47. 09 / us $ 1 on 15 september 2008. this is on account of rising risk aversion due to worries over global economic slowdown and credit tightening. concerns over rising inflation further added pressure against the peso. for the period 2001 - 2008 ( to - date ), the peso appreciated by 9. 1 percent, generally in tandem with most currencies in the region. the philippine peso has been generally competitive against our major trading partners and competitors in real terms. if we take 2001 - 2002 as the comparator period given both good gdp and inflation numbers, coupled with the manageable external payments position, the end points remain broadly on the same level. on the financial sector, the banking system remains generally sound and stable. the banking system ’ s asset base has been expanding steadily. the continued asset clean - up of banks, accomplished without the use of public funds, has enhanced asset quality, bringing the npl ratio closer to the pre - asian crisis level of around 4. 0 percent. banks remained capitalized at levels above both the bsp - regulatory requirement and the bis standard. owing to reforms earlier instituted, the philippine banking system has not been significantly affected by the financial stresses experienced from the us subprime mortgage market. furthermore, the philippine domestic banks ’ exposure to structured products, such as clns and cdos, issued by investment houses like lehman brothers has been limited and are well cushioned by banks ’ capital base. however, we continue to closely monitor developments in the global financial markets, including further risk aversion against emerging markets including the philippines, as these may adversely impact the growth of the banking sector. where are we heading? the inflation path is expected to be hump - shaped, with the peak around sept / oct this year, after which we expect a gradual leveling off. we expect to see the single - digit level again by late q1 / early q2 next year. nevertheless, the forecasts still indicate that inflation could exceed the 2008 and 2009 targets. the bop surplus by