have imposed fit and proper criteria on directors, while clearly articulating their duties and responsibilities, including the expectation for each board member to exercise objective judgment at all times. banks also have to institutionalize a compliance system to reinforce checks and balances in the institution. further, we have highlighted the importance of having an effective risk management system. all these are accompanied by regular monitoring and strengthened enforcement actions. 4. fourth, we have fully supported the further liberalization of the entry of foreign banks into the philippine market. 5. fifth, we are committed to the timely and appropriate adoption of international banking reforms to our domestic economic conditions. we subscribe to the general principles and objectives of the international reform agenda, but we are also pragmatic in our approach to their adoption. while we are in agreement with the goals, we believe that implementation must follow the principle of proportionality to country - specific circumstances. one such reform concerns financial market infrastructures or fmis, the piping that allows trades to be processed and critical risk information to be properly monitored. for a market such as the philippines, this is critical but it is also a clear challenge. certainly, we need fmi pipelines to execute market transactions, provide transparency, ensure price discovery, introduce risk mitigation, and generate efficiencies. nevertheless, many of the fmis identified by global reforms may not be in synch with the scale of market activity and associated risk in most asian jurisdictions. central counterparties, trade repositories and exchanges for otc derivatives, among others, require a fair amount of investment and a lot of preparation. this is work that does not only involve the bsp, but other financial market regulators as well. this is the reason why the financial market infrastructure as well as the other international reforms are being discussed at the financial sector forum, which is composed of the bsp, the insurance commission, the securities and exchange commission, and the philippine deposit insurance corporation. quality improvement among our banks ladies and gentlemen, we have followed these policy tracks to strengthen our banking system. within this framework, our banks could generally have the leeway to take on more risk exposures, if they so choose. in addition, the regulatory framework is such that it would allow banks to be able to withstand added, if not healthy, competition. there are evolving competitive forces expected to come from banks outside the region which have an interest to service activities in the country as well as future qualified asean banks ( qab

##s that affect movement of good and services. we will likewise remain vigilant that none of these effects pose risk to financial stability. we will continue to be involved in initiatives in implementing governance reforms in the country, including our initiatives for aec 2015. finally, we will continue to work on a more inclusive financial system that that will sustain and promote inclusive growth. final thoughts ladies and gentlemen, i have shared my assessment of our prospects and flagged some key challenges. at the end of the day, we have to nurture the gains we have achieved through time and address the pending issues which we believe can only make us better. markets will always evolve, just as they are changing right now. but philippine banks, in general, have proven themselves to be resilient while remaining responsive to the needs of stakeholders. this is the mark of a strong banking industry, one which can tap growth opportunities while acting responsibly in managing the public ’ s savings. in the end, it boils down to choices we make. and thus far, our record in the banking system speaks for itself. ladies and gentlemen, thank you for your attention. mabuhay! bis central bankers ’ speeches