amando m tetangco, jr : the bsp @ 14 – moving with the power of one in the service of the filipino people speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the bsp 14th anniversary, bangko sentral ng pilipinas, manila, 3 july 2007. * * * members of the monetary board, fellow central bankers, special guests. magandang umaga po at maligayang anibersaryo sa inyong lahat! we are celebrating the 14th birthday of our institution. kaya naman, dapat bati - in muna natin ang bangko sentral ng pilipinas ng malakas at masayang, happy birthday!!! ladies and gentlemen of the bangko sentral, there are, indeed, many reasons why we should be happy. ang pinaka - mahalaga po dito ay ang matagumpay nating pagtupad sa ating tungkulin bilang central bankers ng ating bansang pilipinas! to be objective about it, let us evaluate how we performed on the basis of each of the three pillars of central banking. first, on monetary policy. did we have a responsive and effective monetary policy? in the last two years, we sharpened our inflation targeting framework and stayed true to our mandate to maintain price stability. we enhanced our capacity to analyze information, increased transparency in our communication with markets, and aligned our policy framework with international norms. by any standard, we did quite well insofar as our monetary policy is concerned. in fact, even as oil prices breached record high levels, we managed to tame inflation at low and stable rates : in june 2005, our inflation rate was 7. 6 % ; last may, it had dropped to 2. 4 %, a level comparable to those in developed countries. second, on banking supervision. as the central monetary authority of the country, our responsibility is to provide pro - active leadership to bring about a “ strong financial system conducive to a balanced and sustainable growth of the economy. ” effective banking supervision as well as responsive policies and programs are key to this task. overall, we continue to perform well in this regard. the banking system has been projecting overall soundness : better capitalization ; lower non - performing loans ; steady expansion in deposits ; and better profitability resulting

, however, that a successful transition is not just a matter of isolated changes in the energy sector. we must also consider the potential risks associated with this transition given the interplay among economic activities. according to some experts, “ transitions are systemic in nature, characterized by coevolution between different actors, institutions, supply and distribution chains, ” among others. a low - carbon transition could trigger a chain reaction that might affect the performance and viability of various loan and investment portfolios, which eventually could pose risks to the stability of the financial system and to the real economy. in this light, a progressive approach to transition must be considered without compromising environmental sustainability. the finalization of the principles - based taxonomy will play a critical part here, particularly in opening the door for the inflows of capital to relevant economic activities. the bsp ’ s sustainable finance framework which was released in april 2020 encourages the offering of green and sustainable finance instruments to support such economic activities. but at the same time, the framework safeguards the stability of the financial system against potentially 1 / 2 bis central bankers'speeches significant and protracted impact of climate change and other environment related risks. leveraging on good governance and effective risk management systems, the framework also expects banks to embrace sustainability principles and take strategic, concrete, and progressive actions in response to the climate call. the bsp will be issuing its second - phase regulation to enable the banking industry to make safe and sound response to risks arising from the transition to a low - carbon economy. this supplementary issuance will provide granular expectations on the integration of climate change and other environmental and social risks in banks ’ credit and operational risk management frameworks. banks may gradually consider the future implications of “ stranded asset risk ” in their credit portfolio. no doubt, the energy transition is a complex issue and comes with both risks and opportunities. we are, however, fortunate to have a remarkable set of expert panelists who are at the frontlines of energy transition to provide us with insights on the opportunities, challenges, and potential solutions to accelerate renewable energy and energy efficiency in the country, including financing thereof. on this note, allow me to end this remark by wishing you a successful and meaningful conversation. thank you and stay safe. 1 www4. unfccc. int / sites / ndcstaging / publisheddocuments / philippines % 20first / philippines % 20 - % 20ndc. pdf 2 / 2 bis central bankers'speeches