the philippine banks built in compliance with the bsp regulatory requirements and years of favorable banking conditions, proved to be useful. the banks ’ capital adequacy ratio of 16. 3 percent and 16. 7 percent on solo and consolidated bases, respectively, are well above the bsp ’ s and international standards. meanwhile, the rise in bad debt remains manageable. non - performing loans ( npl ) and nonperforming assets ( npa ) ratios were modest at 3. 1 percent and 2. 1 percent, respectively, as of end - 2020. these numbers compared well with the double - digit levels recorded during the asian financial crisis. given these indicators, the philippine economy has the essential elements to post a strong recovery this year. the robust structural characteristics and sustained policy discipline are the most effective tickets out of this pandemic. rest assured that the bsp stands ready to extend the same set of policy measures implemented in 2020 to support the economy, as needed. as this crisis is unprecedented, the measures we have implemented in 2020 were just as unprecedented. we are one with the government in our commitment to push forward measures to soften the impact of the covid - 19 pandemic on the economy and our fellow filipinos. as of january 12, 2021, the bsp ’ s policy and liquidity easing measures had injected close to 2 trillion pesos in liquidity into the financial system. this amount is equivalent to about 11 percent of the country ’ s 2020 nominal gdp level. moving forward, the bsp ’ s actions and policy thrusts will continue to be anchored on its core mandates of promoting price and financial stability. o n monetary policy : the bsp will remain vigilant over the current inflation dynamics and operating environment with a forward - looking perspective to ensure that the monetary policy stance continues to support economic recovery and address any risks to our price stability mandate. on the financial sector : the bsp will intensify its monitoring and surveillance over its supervised institutions to ensure that they remain responsive to emerging risks and to promote the continued soundness, stability, resilience, and inclusivity of the banking system, particularly through the pursuit of enhanced digitalization. third, on the external sector : the bsp will continue to adopt policies that will help strengthen the economy ’ s resilience to external shocks. these will include maintaining a market - determined exchange rate, sustain a comfortable level of reserves, and keep the country ’ s external debt manageable.

. consequently, gdp growth accelerated steadily, while inflation eased gradually from the double - digit rates of the seventies and eighties. and the philippines started to be recognized as one of the new tiger economies of asia. but the good times did not last. in 1997, the asian financial crisis came. fortunately, the bangko sentral had instituted structural and banking reforms by then. these reforms sustained philippine banks through the crisis in spite of higher problem loans. “ he who does not look back to where he came from will never see his destination. ” various cbp and bsp annual reports ; lamberte, m. ( 2002 ) “ central banking in the philippines : then, now and the future ”. pids discussion paper 2002 – 10. bis central bankers ’ speeches the 1997 crisis taught the bsp three important lessons : one, that a transactional approach to banking supervision that emphasizes individual bank compliance to regulations is not sufficient to mitigate system - wide risks ; two, that interest rate deregulation and financial innovations eroded the traditional link among money, output and inflation ; and three, that a strong financial system needs to be supported by an efficient payment system. thus, in the years that followed, the bangko sentral pursued with great vigor more banking and structural reforms. these have resulted in what we now know as risk - based supervision, inflation targeting and real - time gross settlement or the philpass. fast forward to 2013, and we see just how far the bangko sentral and our economy have come. the economy has more than doubled in size from 20 years ago. in the first quarter this year, the economy expanded at a rate of 7. 8 percent – the fastest in the region. at the same time, inflation has fallen to historic lows and within - target levels for four consecutive years now. the gross international reserves at more than $ 82b can now cover almost one year of imports of goods and services. the banking system ’ s npl ratio is less than 2 percent and capital at 17 percent is more than double the international standard of 8 percent. the payment system is robust, processing an average of p1. 5t worth of transactions daily, 11 times more than the daily value just 10 years earlier. in addition, the bangko sentral ’ s financial inclusion and financial education program continues to inform, protect and empower filipinos. in fact, our regulatory framework and various initiatives for microfinance continue to earn recognition as among the best in the world