that our tools to deal with them remain sharp. we strive to stay on top of developments, and to always be prepared, so that we can address risks appropriately and in a timely manner. this mindset motivates much of the bsp ’ s policy thrusts not just in 2018 but beyond. our intention is to continue laying down foundations for the economy to withstand potential shocks. in closing, while the coming year is likely to bring continued challenges for the philippines, we are well - placed to deal with these challenges. the country ’ s firm growth momentum and manageable inflation environment provide ample space to respond appropriately to evolving domestic and global conditions. on the part of the bsp, we have enough instruments in our expanded toolkit to address the challenges that could arise. on this note, mindful of the past, vigilant in the present and excited for the future, let me wish everyone a happy and fruitful new year. thank you, and good afternoon. 4 / 4 bis central bankers'speeches

aid us in thriving even more. in doing so, i have structured my message in four ( 4 ) parts : ( 1 ) recent developments in the global economic environment and its varied effects on financial and banking stability with mention of the bsp ’ s policy thrusts and initiatives ; ( 2 ) bsp ’ s delivery on its mandate of maintaining price stability ; and ( 3 ) the challenge of digitization and how our payments and settlements system plays a role ; and ( 4 ) finally, i shall share the bsp ’ s mindset for embracing the future. it bears noting that in framing the message this way, i have touched on our mandates, and what the bsp regards as its pillars of central banking. the global economy and domestic financial stability 2017 saw increased momentum in global economic growth. many central banks reverted to more neutral positions, while some signalled the possibility of a tighter monetary policy stance over the horizon. positive us growth momentum prompted the us federal reserve, just last month, to raise its target fed funds rate anew. the european central bank continues to ponder on how and when to start tapering its own asset purchase program. 1 / 4 bis central bankers'speeches with the prospect of higher home market interest rates, some funds have moved back from emerging markets. last year, we saw some capital flow reversals. but despite an overall balance of payments deficit, our year ended with a very manageable external position. in 2017, we also saw the peso ’ s depreciation. even as foreign direct investments flowed in, a reversal of foreign portfolio investment flows as well as loan prepayments was felt in the financial account. the bsp ’ s first line of defense has been to maintain a flexible exchange rate while providing foreign currency liquidity from its amply supply of fx reserves to manage sharp movements. but we also saw a recovery in our exports as major markets picked up. this bodes well for our current account in the coming year. this partially offsets the potential increase in imports of raw materials and manufactured goods due to accelerating public investment in infrastructure. moreover, the steady inflow of remittances from overseas filipinos, receipts from bpos and tourism are seen to provide solid buffers to maintain a manageable balance of payments. despite uncertainties and volatility in the global economy and financial markets brought about by brexit and inward - looking and populist policies of the us, domestic sources of strength have kept the philippine economy growing strongly