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

years. he is here today, and i would like to wish him every success in his new post. let me finally make a few remarks on the global financial situation and the lessons we can draw from this. we are currently experiencing an extraordinary and very challenging period, characterised by severe financial market turmoil that originated in advanced economies. recently, the tensions in the financial sector have spilled over into the real economy and have dampened significantly global growth. since the start of the turmoil in august 2007, the european central bank, like other central banks around the world, has acted decisively to provide sufficient liquidity. in the euro area we have been flexible in our use of operational instruments and procedures in order to contribute to a smooth functioning of the money market. this has been crucial in order to ensure that solvent banks continue to have access to liquidity, notwithstanding the difficulties in the interbank market. it has been encouraging to see the decisiveness with which european governments have worked together, as a second line of defence, to address the turmoil. in this month the g20 – at the level of the ministers and governors in sao paulo and then at the level of the heads of state or government in washington – has adopted a concerted action plan with several dimensions, such as strengthening transparency and accountability, enhancing regulation, promoting integrity in financial markets and strengthening international cooperation. global and close cooperation between central banks has been the first line of defence in addressing the challenges. the second line of defence has now been put up by governments to address the solvency issues of financial institutions affected by the crisis. the lessons that can be drawn from these events represent what i would call work in progress along the following lines : we need more transparency ; less short - termism ; less procyclicality in the functioning of the global financial system ; and better risk management by individual institutions. this has to be accompanied by more discipline in macro policies at the level of all major participants in the global economy. to sum up, i would like to assure you, governor el okdah, that from our side it will be a pleasure to renew the cooperation between the european central bank and the partner national central banks of the escb with the central bank of egypt. i also welcome the support of and commitment from the european commission and the ministry of international cooperation and look forward to the finalisation of procedures that will allow us to sign the contract with the delegation of the european commission to egypt before the end of this year. i will be