, the more monetary policy has to do. as you know, the riksbank has two objectives for its operations : “ a safe and efficient payment system ”, which we usually interpret as financial stability, and “ price stability ”, which the riksbank has formulated as an inflation target of two per cent. i believe that one of the most important lessons of the financial crisis is that these two objectives are interlinked. financial stability is a precondition for monetary policy being able to work as intended, while monetary policy can affect financial stability. it is therefore rather natural to take the risk of financial imbalances into account in monetary policy. however, there must be a reasonable connection between alternative regulations and monetary policy. regulations can be described as an indirectly - targeted means of raising or lowering interest rates in a certain social sector. if the regulations deviate significantly from the monetary policy that is being conducted, distortions and contradictory messages will arise after a while in the financial sector. new control problems will emerge, for example through the appearance of shadow banks or through excessive borrowing abroad. as is so often the case, it is a question of finding the right balance. a low repo rate is justified, but how low? the economic situation over the last 12 months, that is the weak development of economic activity abroad and the low inflationary pressures, has made it necessary to gradually lower the repo rate in order to enable inflation to rise towards the target of 2 per cent and to normalise resource utilisation ( see figure 1 ). this means that we have a very low repo rate today, which is also reflected in lower interest rates for households and companies ( see figure 10 ). determining how low the repo rate should be entails balancing many different factors against each other. as i said earlier, i believe that we must take the risks associated with financial imbalances into account in our monetary policy decisions as the level of household indebtedness is so high. why not lower the repo rate more when unemployment is high? one of the arguments put forward for further repo - rate cuts is that unemployment is high ( see figure 14 ). i have a lot of understanding for this argument. so why not cut the repo rate more? here i would like to point out once again that we have lowered the repo rate and the repo - rate path several times over the last 12 months, partly with particular reference to unemployment. however, our analysis

amando m tetangco, jr : building broader horizons in 2013 speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the annual convention of the chamber of thrift banks, makati city, 20 march 2013. * * * the officers and members of the chamber of thrift banks, under the leadership of outgoing president, patrick cheng, and incoming president, jose teodoro limcaoco, members of the monetary board, fellow bspers, my colleagues in the banking industry and in government service, ladies and gentlemen, good morning. the bangko sentral ng pilipinas is pleased to once again take part in your annual convention. as i begin my remarks this morning, let me take this opportunity to thank the outgoing officers and members of the board for your efforts. i am pleased that we were able to move forward on several fronts, even as we still have a full plate of reforms. let me also congratulate your incoming officers. indeed, to be elected to the ctb board shows the confidence that your peers have in you. more importantly, your accepting such a challenge underscores your commitment to work for the greater good. a part of the tradition of your convention that i appreciate is the row of display booths one has to pass through as one enters the ballroom. stalls of the various companies that have grown because of partnership with the industry. to me, the variety and quality of the displays have been an indicator of the state of the thrift banking industry. if this year ’ s display continues in that tradition, i believe it is telling us that good things are in the offing for the ctb and our economy. what is in the horizon? this brings me to your chosen theme. “ building a broader horizon for 2013. ” horizon is an interesting word. it has a couple of meanings and evokes several feelings. one meaning of horizon is that it is the “ apparent intersection of the earth and sky. ” we ’ re coming into the summer months. and i am sure, if you find yourself on the beach in the next few weeks, you will discover that it is hard to escape the temptation to stand on the shoreline, maybe barefoot, and then fix your gaze towards the vastness of the ocean – just to see where the ocean and sky seem to meet the horizon. another meaning of horizon in the webster dictionary is that it