amando m tetangco, jr : focus on the central bank of the philippines ’ core mandate of promoting price and financial stability opening statement by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the foreign correspondents association of the philippines ( focap ) forum, manila, 4 december 2006. * * * i am pleased to address you in this forum organized by the foreign correspondents association of the philippines. your continued interest in the philippine economy has greatly helped in shaping the quality of information provided to the international community. fora such as this offers us an excellent opportunity to engage various stakeholders in policy dialogue. my short remarks today will focus on the bsp ’ s core mandate of promoting price stability and financial stability and how the institution has responded to the challenges facing it. as fed chairman bernanke aptly puts it “ monetary policy is most effective when it is coherent, consistent, and predictable, while at all times leaving full scope for flexibility and the use of judgment as conditions may require ”. this highlights the fundamental role of transparency and communication in inflation targeting. the more that the public understands the logic of our policy framework and decisions, the more we are able to better manage inflation expectations and the more their behavior will facilitate the achievement of the price stability objective. an encouraging development is that inflation has been on a decelerating trend beginning the second quarter of this year, much earlier than expected. what is bsp ’ s view on the inflation outlook? in our third quarter inflation report, released in october, we noted that our short run prognosis points to subdued supply pressures and uneven demand conditions. subsequently, on november 2, the monetary board decided to maintain the bsp ’ s key policy rates. at the same time, the tiering scheme on banks ’ placements with the bsp under the rp / rrp and special deposits accounts windows was restored. this measure is intended to encourage banks to seek alternatives to placing their excess funds with the bsp such as lending to the public. looking ahead, the bsp is fully aware that it still has to contend with the obvious danger to inflation posed by oil prices and the potential surge in liquidity growth from strong foreign exchange inflows. as risks to inflation are judged to remain tilted on the upside, the bsp will continue to keep a close watch on incipient inflationary pressures, especially those emana

the fear of administrative sanctions and enforcement by regulators in the event of the correspondent bank being found to have inadequate systems and / or controls in place to curb money - laundering and the financing of terrorism. the eastern and southern africa anti - money laundering group ( esaamlg ) conducted a survey on de - risking for its 2016 - 2018 work programme. a fair number of respondent banks in the esaamlg region indicated that correspondent banking relationships had been terminated or restricted between 2011 and 2016. the reasons cited for the terminations and restrictions varied and included, but were not limited to, concerns over money - laundering and the financing of terrorism. countries that were particularly affected countries included angola, tanzania, and zimbabwe. page 7 of 13 the esaamlg survey also indicated that not all respondent banks reported having found replacement correspondent banking relationships or having made alternative arrangements. once individuals and entities become unbankable as a result of derisking, the risk increases that underground financial systems may develop. the magnitude of illicit capital flows in africa illicit capital flows continue to present a serious problem to authorities, particularly on the african continent. in order to resolve the problem of illicit capital flows, there is a need for coordinated efforts in sourcing data from all countries in order to understand the magnitude of the problem. one of the reasons is that the availability of data in respect of illicit capital flows is inadequate. organisations such as global financial integrity and the organisation for economic co - operation and development play an important role in attempting to estimate of the magnitude of global illicit financial flows. there are however significant challenges when it comes to conducting research in this regard. african governments have a strong interest in stemming illicit financial flows, including through obtaining the cooperation, compliance, and commitment of other actors. in the context of absent political will in some jurisdictions, there is a need to take urgent steps towards international coordination with the intention of collecting reliable data and addressing the problem of illicit capital flow. the need for effective crisis resolution regimes the most recent global financial crisis has demonstrated unequivocally that there is a strong case to be made for robust resolution regimes being established for financial institutions given their vital role in any country [UNK] s economy. the global financial crisis severely compromised the stability of the financial sectors of many countries. even in countries where the direct impact was limited, significant indirect consequences were experienced due to the subsequent global economic downturn. page 8 of 13 this proved that more stringent supervision is not necessarily sufficient to appropriately safeguard the