sovereignty in the face of private - sector initiatives such as libra. this is also one of the concerns highlighted by the people ’ s bank of china with its digital currency electronic payment ( dcep ) project. in this context, what form should our cbdc take? public expectations on this differ significantly from those of financial institutions. as a result, in the long term, two different uses of the cbdc could exist side by side : one for payments between financial sector players ( a socalled “ wholesale ” currency ) that uses blockchain technology and all its possibilities, notably smart contracts ; and another for the general public ( a so - called “ retail ” currency ) that is simpler and better suited to retail transactions. in this respect, financial institutions are much more digitally mature than private individuals as they already access central bank currency digitally via the bank accounts they hold with the central bank. in addition, following on from the questions raised by the governor of the bank of england, mark carney, on the idea of creating an international digital currency in response to the dominance of the us dollar, i think there would be some advantage in moving rapidly to issue at least a wholesale cbdc, as we would be the first such issuer in the world and would thus reap the benefits of having a benchmark cbdc. 2 / the issuance of a cbdc can generate significantpositive externalities by increasing the productivity of the financial sector and by extension the economy, and by shoring up confidence in the currency and in the financial system. but, in parallel, it is vital that we examine the potentially negative externalities that a cbdc could generate for liquidity, profitability and bank intermediation. in particular, we need to look very closely at the risks linked to large - scale and / or sudden conversions of bank deposits into central bank money. 3 / the third aspect is the modalities that could be used to circulate the cbdc, especially the “ retail ” version, about which we need to be particularly vigilant. i ’ m thinking about the issue of its legal tender status – which is not indispensable but probable ; the conditions under which it can be held – in the form of accounts rather than tokens ; and last, whether non - residents will have access to it, which would certainly help to raise its international status. moreover, thanks to their proven expertise in payment instruments, know - your customer requirements and transaction monitoring

philosopher aristotle once said “ one swallow does not a summer make. ” from the philippine perspective, we move forward in 2016 with cautious optimism. we are cautious – because we are mindful of the challenges ahead and of the possibility that our operating environment can change so swiftly at a scale we may not have anticipated. yet we are optimistic because we start from a position of strength, having managed to address obstacles we encountered in 2015 and the great financial crisis in 2007 – 2008. at this point, it will be helpful if i give an assessment of 2015 and then move on to 2016. after i complete my narrative, you can make your own judgment on the state of our economy. recalling 2015 2015 brought with it, its own challenges and opportunities. global growth remained uneven, resulting in a divergence in policy responses from major central banks – the us fed finally went ahead with its much - awaited “ lift - off ” and raised interest rates ; china devalued its currency ; while the european central bank provided further stimulus to its economy with interest rate cuts and an expanded bond purchase program. bis central bankers ’ speeches these external headwinds made for some rough sailing for the philippines in 2015 due to higher risk aversion among investors. some capital flowed out particularly in the second half of the year, the philippine stock market took a hit and the peso depreciated. there were similar shifts in financial markets across emerging asia. nevertheless, domestic sources of resilience kept the philippine economy on a steady noninflationary growth. low and stable inflation – 1. 4 % in 2015, the lowest since the bsp adopted the inflation targeting framework in 2002 – continued to encourage investments and business expansion. in the third quarter of 2015, our economy grew at an accelerated pace of 6. 0 percent. this made the philippines one of the fastest - growing economies in asia in the first nine months last year. at the same time, the country ’ s sound, stable and liquid banking system provided solid support to our economy in 2015, with bank lending continuing to grow in double - digit rates, with credit flowing particularly to the productive sectors. and as a result of the continuing cooperation between the bsp and the banking sector to continue to enhance governance and risk management practices of banks, industry profitability improved further with return on equity rising from 9. 67 % in september 2014 to 10. 04 % in september 2015 ; asset quality got even better with gross npl ratio improving to 2. 32