earlier materialize, we have ample policy space to respond. there is enough room for monetary policy to support the economy. consider, for example, the prospects of monetary policy in the midst of us fed normalization. the present and future stance of domestic monetary policy remain data - dependent. we will therefore act on ( global ) developments only to the extent that it alters the domestic inflation path. our assessment now is that the current policy settings remain appropriate. thus, we do not need to adjust in sync with the fed ’ s rate hikes. the bsp also has a deeper policy toolkit now. this includes : ( i ) macroprudential regulations that can be targeted to specific sources of risks, ( ii ) contingency measures such as liquidityenhancing facilities, and ( iii ) rediscounting windows and regional firewalls that boost the flexibility 3 / 4 bis central bankers'speeches and effectiveness of our actions. we intend to further refine these tools as appropriate. in terms of supervision, we continue to review and align our financial regulations and policies with international standards to improve risk management as well as ensure the competitiveness of our banks in view of asean integration. we intend to further enhance our macro - financial surveillance capability by, among others, improving coordination and cooperation with other government agencies and regulators. there is also elbowroom for fiscal authorities to further boost public spending and accelerate aggregate demand and productivity growth. concluding remarks : strength in cooperation in sum, ladies and gentlemen, the global operating environment today is certainly challenging. but we have built buffers over time. in addition, the bsp remains committed to its mandate of price and financial stability. i am sure that with a good appreciation of risks and the right amount of vigilance, the partnership between the public sector and private stakeholders ( such as yourselves ) would push the economy upward and forward even in the face of the downside risks. at the beginning of my remarks i mentioned that this is the 12th consecutive year we are doing this together. the number 12 has different meanings in various cultures and religions. but more universally, 12 is a number that is used to mark time. there are 12 hours on a traditional clock, and there are 12 months in a traditional calendar year. as we begin a new year, i wish to encourage everyone to mark time judiciously. time is an equalizer. whether you are rich or poor, in public or private sector, each of us has been given

on the more specific issue of brexit, the direct exposure of the philippines to the uk is relatively limited. the bigger concern, however, is whether the other eu economies will follow the uk ’ s lead ; given that our trade exposure to the eu is larger at around 12pct. as for the trump election, we will need to see how his campaign rhetoric translates to actual policy. our eyes and ears are tuned to january 20, when he actually takes over the white house. the second risk comes from the us fed ’ s future policy rate actions. at its meeting in december 2016, when the fed raised its target rate for the first time for the year, the fed indicated that it would raise rates three more times in 2017. if the fed veers from this, volatility in both the global and domestic fx and fixed income markets could rise. a steeper than expected hike in us interest rates could lead to a faster rise in domestic commercial and government securities interest rates also, as well as stronger depreciation pressures on eme currencies, including the peso. such price movements may adversely affect the balance sheets of domestic corporates and banks, especially of those that have fx and floating - interest rate obligations. this adverse result would be magnified if the markets panic, overreact, and thus amplify the initial increases in interest rates and weakness of the peso. moreover, a tightening in domestic financial market conditions could also dampen domestic credit activities in the near - term. however, if the reason for fed tightness is that the underlying us economic growth has become stronger, then that may offset some of the near - term negative impact of the fed tightening and lead to over - all support for global growth in the medium - term. on the other hand, if the fed turns dovish ( i. e., fewer or no further hikes in 2017 ), then that could encourage “ risk on ” market behavior, stall domestic interest rate increases and dampen depreciation pressures in emerging markets. but such result is unlikely, as trumponomics, which is reported to focus on increased fiscal spending, is widely expected to be inflationary. third. in addition to these external risks, we also have risks emanating from the domestic front such as political noise and adverse weather disturbances. moreover, while the administration has committed to ramp infrastructure spending, they could be forced to cut back on this, should 2 / 4 bis central bankers '