the financial, social and economic well - being of those who are otherwise “ excluded ”. the same supervisory principles as those in the mainstream market continue to apply but the execution allows for the proportionate application of regulatory requirements. in this way, we provide for flexibilities in policy aspects where rigidities would deter the creation of markets. this is precisely what we have done in the philippines. to - date, we have crafted 20 regulatory issuances specific to the financial inclusion framework. these 20 fall under 5 key aspects : 1. wider range of products ; bis central bankers ’ speeches 2. expanded physical network ; 3. extended virtual reach ; 4. enhanced transparency and disclosure ; 5. lower barriers to customer acquisition 1 we believe these ensure effective implementation of financial inclusion. in providing for a wider range of products, for example, we recognize that the financial service needs are quite varied. toward this end, the bsp has recognized credit facilities of up to php300, 000 for such instruments as micro - enterprise loans, micro - agri loans and, housing microfinance loans. to make this micro ecosystem thriving, we complement the credit facilities with needed auxiliary products such as micro - deposits and micro - insurance product lines. the combination of all these product lines allows for a free flow of funds within an environment that is specifically structured for small - ticket item transactions. we recognize that access is a major concern, particularly with 37 % of municipalities not having a banking office. to address this, we introduced the concept of microfinance banking office ( mbo ). mbos are operationally attached to a full - service branch but can be established in hard - to - reach areas. on their own, they serve as a launch pad for a range of product lines from loans, to savings, remittances, to e - money conversion, bills payment, pay out services and even foreign exchange purchases on a limited basis. mbos are separate from the electronic money ecosystem which we introduced a couple of years ago. using technology that is readily accessible by the retail market, we are able to bridge the physical gaps in banking with a technology - driven network. this covers several facets including fund transfer facilities, retail payments and even partnerships with merchants. pricing is certainly another key element. contrary to some perception, financial inclusion operates on market terms and does not require any special pricing concession. to make this effective, we believe it to be important that the financial consumer is provided with accurate information on

pricing. by expanding the provisions of the truth in lending act, the pricing approach has been standardized to avoid possible misrepresentation. beyond pricing, we are also of the belief that the consumer would be better protected if he is informed of the different investment options available to him as well the macro and microeconomic factors that are likely to impact on the value of his chosen investments 2. none of the above would be possible, however, if specific regulatory barriers are not addressed. through the recent issuance of updated anti money laundering rules and regulations, we are able to strike a balance between prudential requirements and realistically not having direct knowledge of those in under - served areas. to address this difficulty, our new rules rely on 3rd parties already embedded in the communities to fulfil the face to face requirements of the know - your - customer threshold 3. a specific example would be allowing banks to rely on customer identification by agents that are located in underbanked communities. there is decreased transaction cost in customer retention and record keeping. to date, the bsp has conducted under its bsp economic and financial learning program 90 public information campaigns, 48 local and 11 international financial learning campaigns for ofws and their families, 9 financial expos, 11 financial learning conferences for microfinance clients and the unbanked. an example of authorized third parties under the new rules are covered institutions such as money changers, pawnshops and remittance agents which have been accredited by specific banks in the head offices to perform kyc functions for them in the underbanked communities. bis central bankers ’ speeches the net effect is an enabled environment. today, 188 banks provide microfinance services. we estimate that one million households are serviced with an outstanding portfolio of about php 7 billion as of september 2011. when compared with the php 7. 17 trillion total resources of the banking system as of november 2011, the portfolio for financial inclusion is modest. however, this same portfolio was not formally in existence only a decade ago and it is in that context that we measure the strides taken, which then reflect greater significance. with all of the above initiatives and changes, a natural question to ask is whether financial inclusion impinges upon financial stability. after all, inclusion requires specialized rules for a specialized market constituency. however, the link between inclusion and stability – or more appropriately, between reducing exclusion and increasing instability – may not be unique. this makes it difficult to be precise. nonetheless, two possibilities may be considered