of public authorities including central banks, crypto has not yet given rise to financial stability issues, given its relatively limited role for most financial system participants and the majority of the public. however, there are risks that central banks, regulators and supervisors are thinking about ( for example, the basel committee on banking supervision recently issued a public consultation on how to treat crypto exposures on bank balance sheets ), which are interlinked with consumer protection considerations. it can be helpful to distinguish between different types of crypto when considering these issues. some crypto, which have no link to any underlying assets and therefore no " anchor " to provide stability of value, have shown extreme price volatility and are very high risk for investors. on the other hand, on the evidence some people do like to collect them, just as some like to collect other things ( such as stamps, for example ). buying such items can be profitable but it can also be lossmaking ( and the recent interest in crypto purchases does have some characteristics similar to the excitement generated by tulips in the seventeenth century ). from a macro perspective, if these type of crypto were to become a significant presence in the financial system, their volatility could lead to losses, which could have implications for financial stability, especially if associated with leverage. stablecoins are a different type of crypto and claim to offer conversion at a fixed rate to currencies such as the dollar or euro. this seems to deal with the issue of extreme price volatility, given the link to underlying stable assets like the euro, and stablecoins could be useful from a payments perspective and as a medium of exchange. however, of course this means that they are only as good as the governance behind the promise of the backing. if widely - used stablecoins were not managed properly and consumers could not fully convert their holdings to the underlying currency – for example if the assets in which stablecoin issuers invested in were illiquid – this could also have financial stability implications. risks are increasing as individuals consider putting some of their money into crypto ( although at the moment it remains of limited relevance for the majority of the public ). aside from the risk of losing their money given the inherent riskiness of crypto, people may also be exposed to scams and fraud given the opaque nature of the products. the european commission has proposed new legislation ( markets in crypto assets ( mica ) ) which should provide greater

the prospect of a “ grexit ” heightened, global financial markets recoiled. asean was not spared from the contagion even though the impact was not protracted. when china devalued the renminbi, this was, literally, closer to home and the impact was more pointed. the devaluation on august 11 was itself a significant surprise but to see it done on three consecutive days raised considerable concern over the potential extent of a slowdown of the chinese economy. and certainly, we have all talked about the “ normalization of us monetary policy ” for a considerable period now. we went through the taper tantrums in 2013 – 2014 and then anticipated the lift off in 2015, only to find ourselves still reading between the lines of fed pronouncements. the impact that these developments have had on asean does not reflect in any way on any potential weakness of asean itself. instead, the lesson that i take away is the reminder that we – either as a collective bloc or as individual jurisdictions – are deeply integrated to the ebb and flow of the global financial markets. the philippine boat may not be the large vessel of other jurisdictions but the fact that we have been able to steer through the turbulent and uncertain waters of the last decade is itself the testament of our resolve and our strength as a market. in part, we have been able to steer the economy through these disturbances because over the years we have built the foundations of a strong macroeconomy. in 2002, we adopted a rigorous framework for monetary policy formulation – inflation targetting. the discipline that this framework requires has caused us to be focused on maintaining stable prices, which has in turn been central in building market confidence. that said, we constantly also find ways of doing things better. for instance, just last week, the monetary board approved the adoption of an interest rate corridor system for the conduct of monetary policy. this operational change is expected to make the signals from monetary policy more effective, strengthen price discovery and therefore make the transmission of monetary policy more efficient. we have also consciously crafted market - based banking regulations consistent with the evolving international reform agenda. this has created an operating environment that encourages our banks to innovate while being conscious of risks. in line with this, we have also sustained a foreign exchange rate policy wherein the exchange rate is allowed to be essentially market - determined, with scope for official action only to limit excessive price movements. are we ready? this brings me to my point today :