##ity in times of stress but it is costly to hold in normal times. their reactions, however, are opposite. private institutions tend to underestimate their liquidity needs because, in case of shock, the central bank can step in as a lender of last resort. for countries, the bias goes in the other direction. provision of international liquidity, whether private or official, is contingent, conditional and uncertain. with no international lender of last resort, financial stability motives could lead to unlimited accumulation of liquidity. internationalisation of finance has created a fundamental indeterminacy in the demand for reserves. as a consequence, past benchmarks used to assess the adequacy of reserves are no longer valid. current research ( obstfeld et al. 2009 ) shows that broad domestic money aggregates may be the best explanatory factors for the amount of reserves. multilateral provision of international liquidity : the search for financial safety nets the rationale for a multilateral source of liquidity provision is straightforward : stabilizing the demand for international reserves would bring huge benefits in terms of world welfare. at the moment, reserve accumulation can only occur through a conjunction of balance of payment surplus and some degree of exchange rate intervention and creates externalities for other countries. now, suppose there is “ ex ante ” an existing pool of reserve assets which countries could tap into under specific circumstances. if access to this pool is credible and predictable, there would be no need for getting those reserves from the market. this would reduce the incentive for countries to conduct a whole set of policies such as : generating current account surpluses through active exchange rate management ring fencing pools of liquidity and capital in local subsidiaries, therefore creating a potential segmentation of international financial markets. implementing “ soft ” capital controls to limit the impact of shocks and diminish the need for reserves all countries, therefore have a common interest in finding ways to disconnect reserve accumulation from exchange rate management and, more generally, from balance of payment situations and monetary policies. the need for national reserves could be reduced if credible mechanisms exist to provide for the supply of official liquidity on a multilateral basis. significant progress has been achieved in this direction during the recent period. a dense network of forex swaps has been put into place between major central banks in the midst of the crisis. other recent official initiatives include : the creation by the imf of a new facility – the flexible credit line – aimed at easing liquid

benjamin e diokno : launching of the citi micro entrepreneurship awards 2020 message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launching of the citi micro entrepreneurship awards 2020, manila, 1 december 2020. * * * citi philippines ceo, mr. aftab ahmed ; members of the cma national selection committee ( nsc ) ; partners from the microfinance council of the philippines, inc. ( mcpi ) headed by mr. eduardo c. jimenez ; colleagues in the bsp ; fellow microfinance advocates ; and friends from the media : good afternoon. welcome to the virtual launch of the 18th citi microentrepreneurship awards ( cma ). this year is a landmark for the cma program, for being launched amid the covid - 19 pandemic and showcasing the determination of filipino microentrepreneurs to succeed at this trying time. a critical sector of our country, msmes account for 99. 5 % of business enterprises, 62. 4 % of total employment, and 35. 7 % of gross value added ( gva ). the pandemic disrupted msmes in unprecedented ways. more than ever, it is vital to sustain our microentrepreneurs, who provide essential products and services in the “ last mile. ” predominant in low - income areas and serving as engines driving local economies, microentrepreneurs also nurture swathes of the filipino population depending on them for postpandemic recovery and rebuilding. hence, the bsp is pulling out all the stops to support microentrepreneurs and smes. to stimulate lending to the sector, the bsp has included new loans granted to msmes as part of industry compliance with reserve requirements ; reduced the credit risk weight of current loans granted to msmes ; and assigned zero percent risk weights for loans covered by government guarantee programs. to broaden usage of digital payment streams, the bsp encouraged financial service providers ( fsps ) to waive fees for pesonet and instapay transactions. likewise, the benefits of digitization initiatives supporting our digital payments transformation roadmap ( dptr ) are expected to redound to msmes as they adopt and utilize digital financial services ( dfs ). the bsp is also implementing several projects to facilitate credit flows to the msme sector. our