as the global financial turmoil spread. the peso depreciated 13. 3 pct against the us dollar in 2008 against an 18. 8 pct appreciation in 2007. this loss in value was, nonetheless, in line with movements of other currencies in the region, which also depreciated against the us dollar. in addition, in terms of the real effective exchange rate over the past eight years, the peso has largely maintained its competitiveness against a basket of currencies of our major trading partners and competitor countries. in the meantime, we have been able to keep the gross international reserves at comfortable levels. gir stood at $ 36. 8 b at end november 2008, an increase of about $ 3 b over the end 2007 level. the build - up in gir has allowed us to keep the bop in surplus in 2008. at almost $ 37 b, gir is 5. 8 months ’ of imports and 2. 5 times short - term debt based on residual maturity. these ratios are at least twice the international benchmark levels of 3 months of imports and 1 time the debt ratio. the banking system remains sound. the series of banking reforms put in place over the last five years, and among others, the inherent conservatism and the domestic orientation of banks, as well as the bsp ’ s phased - in approach to embracing financial innovation, have resulted in minimal exposure of the banking system to the troubled international financial institutions. in addition, banks continue to be capitalized above the bis standard and bsp regulatory requirement ; bank balance sheets are at their strongest since the 1997 asian financial crisis ; and assets continue to grow. what do we foresee for 2009? 2009 will be a critical year. it could define how we will perform when the markets turn around. if you read most analyses of the us and major economies ’ downtrend, the expectation is these could last about 18 months. therefore, depending on when you begin your count, recovery in the us and maybe globally could begin in 2010. no one, however, can say for certain how deep and how long the global downtrend would be, nor how far markets would retreat. therefore it is incumbent upon us to continue to brace for further uncertainty in the global financial markets, recessionary trends that would spread to regions beyond the developed world ; and volatilities in commodity prices, particularly oil. how shall we respond to the unfolding environment? monetary policy in 2009 will

event, acted quickly and appropriately, and our actions were successful. friday ’ s announcement on open market operations to address potential quarter - end funding pressures on interest rates followed this same approach : quickly diagnose the problem, develop the right action plan, and execute that plan. at the same time, it is equally important that we examine these recent market dynamics and their implications for the liquidity needs in relation to the overall amount of reserves held at the federal reserve. we will continue to monitor and analyze developments closely. as federal reserve chair powell stated in his most recent press conference, the fomc will assess the implications for the appropriate level of reserves and time to resume organic growth of the federal reserve ’ s balance sheet consistent with the successful execution of the fomc ’ s ample reserves framework. 2 that ’ s enough on recent events for now. i ’ ll turn to another very important issue, reference rate reform. libor won ’ t last forever some say only two things in life are guaranteed : death and taxes. but i say there are actually three : death, taxes, and the end of libor. everyone in the financial services industry needs to be aware that the date when the existence of libor can no longer be guaranteed is fast approaching. i titled remarks i gave on this subject earlier in the year “ 901 days ” to remind everyone just how little time both the public sector and market participants have to prepare for a world without libor. 3 we are now 831 days away from that world, and while some institutions are making good progress, others are sticking their metaphorical heads in the sand, hoping the issue will go away. even more concerning are those wearing rose - tinted glasses, getting nostalgic about libor and hoping for an extension to the deadline or a reincarnation of the rate. i cannot emphasize enough 2 / 5 bis central bankers'speeches that the clock is ticking and everyone needs to get their firms ready for january 1, 2022. a look at the numbers, and recent history, reveals the need for urgency. there are $ 200 trillion of financial contracts referencing u. s. dollar libor. 4 but the volume of actual transactions that term libor is based on is very small. when individual banks make libor submissions they are largely based on judgment, not real transactions. this makes the rate vulnerable to manipulation, and banks are increasingly reluctant to provide submissions, adding yet further risk around using the rate. the u. k.