applause! indeed, given the global economic slowdown resulting from the continuing financial crisis, it is important that we remain united in our efforts to minimize its adverse impact on our country and our people. ensuring the availability of market liquidity is a critical element in a comprehensive approach to avoiding a severe slowdown. in this connection, the bangko sentral ng pilipinas has been implementing a series of moves in accordance with this overall thrust to provide better access to credit. among others, we have done the following : • first, we have reduced policy interest rate twice since december 2008 by a total of 100 basis points. in effect, we have lowered the cost of money for banks. this paves the way for banks to charge lower interest rates for their loans and in effect reduce the overall cost of borrowing and doing business ; • second, we have reduced the deposit reserve requirements for banks by 2 percentage points. this should infuse roughly p60 billion in additional liquidity. latest information reveal that demand for money remain strong : in december 2008 domestic liquidity grew by 15. 6 percent from the previous year. this double - digit growth in domestic liquidity indicates that there are funds available in the system which could be tapped for investment and other productive activities ; • third, we have opened a us dollar repurchase facility. this is a preemptive move on our part to provide liquidity to the market, not only in pesos but also in dollars. relevant to this, i wish to report that our country ’ s gross international reserves is at an all - time high of $ 39. 2 billion as of end - january 2009 ; • fourth, through the “ credit surety fund ( csf ) ” program which it conceptualized, the bangko sentral ng pilipinas has provided leadership in addressing the problem of our msmes or our micro, small, and medium entrepreneurs in getting loans for lack of collateral. the credit surety program brings together well - managed and wellcapitalized cooperatives with local government units and other donors to provide surety cover, in place of collateral, to guarantee msmes ’ bank loans. the credit surety fund operates at the provincial level and has been launched in cavite, aurora, and bohol. i am happy to report that more provinces have expressed interest in joining this csf program. • fifth, to provide banks better access to additional funds which they can relend to the public, we have increased the budget for

a crisis, known as ‘ funding in resolution ’. it is aimed at ensuring that the big banks have sufficient liquidity during preparations for and in the phase immediately after resolution. for this purpose, finma is drawing up resolution funding plans in line with international standards. in cooperation with the snb and the two banks concerned, it is currently assessing the big banks ’ liquidity needs under possible crisis scenarios. finally, both big banks are in the process of finalising their swiss emergency plans, in which they have to demonstrate that they would be able to maintain their systemically important functions without interruption in a crisis. credit suisse and ubs have taken important measures in this context over recent years. for instance, they have both established swiss subsidiaries to house their systemically important functions. according to finma, further efforts by the big banks are required to ensure their plans are finalised by the statutory deadline of end - 2019. 1 domestically focused banks i would now like to turn to the domestically focused banks. the mortgage and real estate markets remain the biggest source of risk for these banks. imbalances persisted on these markets in 2018. both mortgage lending volume and prices for single - family houses and privately owned apartments continued to rise at a moderate rate in 2018. in the residential investment property segment, transaction prices fell slightly in 2018. nevertheless, the risk of a price correction in this segment remains particularly high. on the one hand, this is due to strong price increases in previous years. on the other, the further rise in the number of vacant dwellings suggests that the brisk construction activity in rental apartments may have led to an oversupply. the risk appetite of domestically focused banks in this environment remained high. mortgage growth at these banks continued to be robust at around 4. 2 % last year. banks ’ current lending policy in the residential investment property segment should be viewed as particularly risky. first, a growing share of new mortgage loans in this segment was used in 2018 to finance properties in regions with high vacancy rates. second, the affordability risks of new mortgages financing residential investment property are high and have continued to rise. since many of these loans also carry considerable loan - to - value ( ltv ) risk, they are cf. finma, annual report 2018, 4 april 2019. page 2 / 3 berne, 13 june 2019 fritz zurbrugg news conference particularly vulnerable in a scenario involving a correction in real estate prices and a sharp increase in interest rates. given the risks i