the present crisis, part of the real - side adjustment is needed within the banking system. for that the bank of england does have a special role. through the new financial policy committee ( fpc ), we have been pressing the banking industry to adjust given the external threats, as sound banks are needed for sustainable recovery. • this represents the first intervention of so - called macro - prudential policy. can view the role of the fpc as being to ensure that the need for stability in the financial system is not overlooked. looking ahead, this will mean keeping the regulatory regime up - to - date as the financial system evolves and, when the time comes, ‘ taking away the punchbowl ’ before the next party gets as dangerously out of control as the last one did. • the case for operational independence here is just as strong as for monetary policy. taking away the punchbowl is something that requires a medium - term orientation. parliament can tie us to the mast and rely on us not to seek to wriggle free. • but, as with monetary policy, this makes it vital that parliament frames the objective and that we are sufficiently transparent to enable ex ante public accountability. • objective : the legislation governing the fpc is clear that resilience of the system as a whole is the primary goal but that we must not aim for the stability of the graveyard. resilience is not quantified, however. • transparency : while respecting the confidentiality of data on individual firms, fpc is required by parliament to be as transparent as possible – via the published record of our policy meetings and the twice - yearly financial stability report. • this is the background to the fpc calling on the bank to develop a regime for stress testing to be used for both micro and macro prudential supervision. ( part of a much bigger project that is needed for policymakers to gauge just how much stress our economy can take at any time without serious adverse consequences, and what to do about it. ) • one possibility is for fpc to use stress tests to define the degree of resilience the system needs. maybe that could become to financial stability what forecasting is to monetary policy. in the usa and elsewhere the results of such stress tests have been published. bis central bankers ’ speeches • that represents quite a change in regime for regulated firms. but neither the markets nor the public was comfortable with the degree of secrecy on these matters in the past. • it does

by the gradual recovery in external accounts such as foreign direct investments ( fdi ) and overseas filipino remittances. it also helped that the philippines received its highest credit ratings in history before the pandemic began. such favorable assessment enabled the country to access financing with low - interest rates and a long repayment period. 1 / 3 bis central bankers'speeches we are continuously receiving affirmation and even upgrades from international rating agencies. in february 2020, r & i upgraded the philippines ’ credit rating from “ bbb ” to “ bbb + ” with a “ stable outlook. ” in may, fitch ratings and s & p global affirmed the philippines ’ credit rating of “ bbb ” and “ bbb + ” respectively. in june, japan credit rating agency upgraded philippine sovereign debt to a - ( stable ), citing strong economic fundamentals. and in july, moody ’ s affirmed the philippines ’ “ baa2 ” rating with a “ stable ” outlook. the bsp has also worked hand in hand with the country ’ s economic team and the congress on mandating grace periods for debt payments in may and september. we likewise made loans to micro, small, and medium enterprises ( msmes ) count against banks ’ reserve requirement ratio ( rrr ). this move directed capital to this important sector that employs two - thirds of filipino workers ’ and increased the volume of loans to msmes by almost 1, 400 percent from april to november 2020. speaking of banks, the country ’ s banking sector entered the crisis with adequate capital. the average capital adequacy ratio hovers in the 15 percent territory, higher than the bsp ’ s minimum requirement of 10 percent and the 8 percent prescribed by the bank for international settlements. bad debts remain manageable, with the non - performing loans ( npls ) of banks settling at 3. 7 percent as of october 2020. embracing digitalization and financial technology has helped most of us adapt to these changing and challenging times. even before the pandemic, the bsp actively promoted financial technology and the shift to digitalization. the fruits of this advocacy have become a survival tool during the lockdown and enabled us to continue with our transactions within the safety of our homes. hard macro and micro economic data suggest that the worst is behind us. based on available information, we expect the economy to bounce back by 6. 5 to 7. 5 percent next year. with the further easing of restrictions, improvements in the healthcare system,