where these are headed. have we hit the bottom yet?... are we at the top? bottom? is the bsp holding steady?... these are important concerns, of course, because where the peso is and where interest rates are, feed directly and quite concretely into the everyday lives of filipinos. but, i don ’ t have to speak about directionals tonight … everyday you come across some quote from me on these financial prices … so i am certain you already know the stance of the bsp … one, that, the exchange rate will remain market - determined … although, folks, be very aware that the bsp is watching how you conduct yourselves in the market … two, that the policy interest rates will always primarily be dictated by the inflation outlook … but balanced off against concerns on excesses in other segments in the market such as real assets and capital flows. you know that our current assessment is – that inflation over the policy horizon will remain well within our target range of 3 – 5 percent. you must also know that the implication of this on interest rates is that interest rates will remain low over this period. many of you already have a good handle on how the bsp conducts monetary policy and our exchange rate policy. i can say that we have had some success in communicating monetary policy to the market. but we still need to work on conveying the nuances when it comes to financial stability. so, instead of one - dimensional directionals, i would like us to spend the next few minutes discussing financial stability. in the bsp, we believe it is important to pursue financial stability because financial stability makes the transmission of other policies ( including monetary policy ) more effective … moreover, we pursue it because financial stability helps financial institutions better allocate resources. when the risk / return tradeoffs are known and steady, returns are more “ predictable ” even when the risks are relatively higher. in other words, financial stability benefits both the policy makers and the market. so what ’ s new about financial stability? the original draft of this speech contained the bsp financial stability framework … our definition of financial stability … the governance framework in the bsp … and how we are pushing the agenda to go past the bsp borders. but in the interest of time, let me just focus on a couple of points ( well, five points to be precise ) to help you better appreciate what we mean in the bsp when we talk about financial stability, and hopefully

risk having talked about two major near - term risk for the economic outlook, i would also remind you to take appropriate account of one risk that plays out over a longer horizon, namely climate risk. i talked about this in detail earlier in the year. [ 3 ] given your roles as risk managers, it is important that you have a useful framework to assess this risk to your business. climate is a challenging risk to assess but an increasingly necessary one. businesses need to take account of both the physical risks and the transition risks. physical risk is about the direct impact of climate on your business and the assets that it holds. what will be the effect of climate change on the price of an asset my company owns, particularly if it is a long - lived asset such as, for example, a mortgage? transition risk is about the potential effects to businesses as the country and the economy adjusts to the changes in the climate. this includes the adjustment to policy responses required to meet the paris objectives. as risk managers, you can bring your skills at calculating the expected future value of financial assets across a number of potential scenarios. in that sense, climate risk is not that different from other risks, though the challenge of translating uncertain future paths for the climate into paths for the economy and the prices of financial assets is harder than some of the other risks that you generally deal with. but it a challenge that needs to be confronted. is i would emphasise the importance of disclosure, echoing the comments by geoff summerhayes of apra and john price of asic, as well as the information that asic released earlier this week. [ 4 ] you should all be aware of the recommendations of the recent report of the task force on climaterelated financial disclosures ( tcfd ) chaired by michael bloomberg. it is important not just to have disclosure for disclosures sake, but to have consistent and informative disclosure. investors need to https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 15. html 8 / 10 8 / 15 / 2019 risks to the outlook | speeches | rba be able to take account of that information in making their decisions, and be able to compare that across companies and across financial assets. risk management under uncertainty is always challenging, but the challenge can be reduced with better and consistent information both in terms of the data inputs and the consistency of the scenarios considered. interest rate benchmark reform the final issue i