nestor a espenilla, jr : third pillar of central banking speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the " providing a safer, more efficient, and more inclusive philippine payments and settlements system " conference, manila, 27 july 2018. * * * friends from the industry, media, fellow bspers, subject matter experts, esteemed guests, ladies and gentlemen, good morning. the bsp is pleased to host this conference on “ providing a safer, more efficient, and more inclusive philippine payments and settlements system. ” there are three pillars of central banking. every bsper knows this. the first pillar is price stability through the conduct of monetary policy. the second is financial stability through financial system supervision and regulation. the third is an efficient payments and settlements system through the issuance of currency, the operation of the real - time gross settlement system, and oversight over the payments system. the spotlight is often on the first two pillars and we hail the policies and initiatives pursued to achieve them. the importance of the third pillar is often glossed over. the payments system is often compared to the plumbing system. very important but not very exciting. lately though, this has been changing. and this change excites us for all the possibilities it brings! developments are unfolding at a rapid pace and more and more digital payments systems and services are being introduced. in the not - so - long - ago - early - 1990s, settlement of interbank transactions was a manual system. since 2002, the settlement of time - critical and large - value financial transactions has been handled by philpass, the country ’ s very modern real - time gross settlement system when it was installed. in its first 5 years, philpass processed an average of 1, 000 transactions daily, valued at php35 billion per day. in the last 5 years, the daily average is at 6, 000 transactions, valued at php 1. 4 trillion per day! today, we are in the process of upgrading philpass to replace the system implemented almost 16 years ago. this will further enhance the safety, efficiency, and resiliency of the country ’ s settlement system. at the same time, we are migrating the communication and messaging systems of the infrastructure to the global standard iso 20022. this shall prepare our payment and settlement system to be regionally and globally interoperable. indeed, a safe

in the latter part of 2021. meanwhile, inflation further eased in december 2021. on an annual basis, inflation for food, 1 / 4 bis central bankers'speeches alcoholic beverages and tobacco, and non - food items continued to slow down in december owing to easing supply constraints. however, prices of electricity, gas, and other fuels further increased amid elevated global prices of crude oil and coal. core inflation, which excludes volatile food and energy prices, likewise declined in december as supply - side price pressures abated. targeted non - monetary measures by the national government helped ease the pressures from supply - side factors. the consecutive quarters of positive year - on - year economic growth point to prospects of sustainable recovery. nevertheless, with recovery still in its nascent stage, the bsp is keen to maintain policy support for the economy. we will properly time our exit strategy as withdrawing support either too early or too late may have undesirable consequences to the economy. to date, the bsp ’ s liquidity - easing measures in response to the pandemic amount to 12 percent of gdp. the prevailing monetary policy stance is supported by a manageable inflation outlook and anchored inflation expectations. based on our latest baseline forecasts, inflation is seen to settle at 3. 4 percent in 2022 and 3. 2 percent in 2023, well within the official target range of 2. 0 to 4. 0 percent. however, risks to the inflation outlook appear to be slightly on the upside for 2022 but remain broadly balanced for 2023. over the near term, major upside risks include increase of global nonoil commodity prices due to strong global demand. additionally, we continue to monitor the developments surrounding typhoon odette to determine if it will have secondary effects on inflation. meanwhile, results of the bsp ’ s survey of private sector economists conducted in december 2021 showed steady mean inflation forecasts at 3. 5 percent for 2022 and 3. 1 percent for 2023. the domestic economy is expected to rebound stronger this year. the interagency development budget coordination committee ( dbcc ) sets its 2022 gdp growth assumption to a range of 7. 0 to 9. 0 percent from 5. 0 to 5. 5 percent last year, taking into account continued recovery prospects as more people get vaccinated and as more businesses rebound from the pandemic. meanwhile, overseas filipino remittances are seen to have reached a new record high of us $ 31. 7 billion in 2021 from