questions relates to capital flows into emes raising the familiar challenge of managing the impossible trinity. let me turn to these one by one. 12. the first issue, rebalancing, is the focus of the latest ( october 2010 ) world economic outlook of the imf. i can do no better than to quote from the foreword to the report. “ achieving a “ strong, balanced and sustained world recovery ” – to quote from the goal set in pittsburgh by the g20 – was never going to be easy..... it requires two fundamental and difficult economic rebalancing acts. first, internal rebalancing : when private demand collapsed, fiscal stimulus helped alleviate the fall in output. but fiscal stimulus has to eventually give way to fiscal consolidation, and private demand must be strong enough to take the lead and sustain growth. second, external rebalancing : many advanced economies, most notably the united states, which relied excessively on domestic demand, must now rely more on net exports. many emerging market economies, most notably china, which relied excessively on net exports, must now rely more on domestic demand. these two rebalancing acts are taking place too slowly. ” 13. a prime lever for redressal of external imbalances is exchange rate flexibility, the second issue that i listed. rebalancing will require deficit economies to save more and consume less. they need to depend for growth more on external demand which calls for a real depreciation of their currencies. the surplus economies will need to mirror these efforts – save less and spend more, and shift from external to domestic demand. they need to let their currencies appreciate. managing currency tensions will require a shared understanding on keeping exchange rates aligned to economic fundamentals, and an agreement that currency interventions should be resorted to not as an instrument of trade policy but only to manage disruptions to macroeconomic stability. 14. that brings me to the third issue that i listed, return of lumpy and volatile capital flows. since capital flows have become such an emotive topic around the world in recent months, it is important perhaps to recall a few realities. first, that emerging and developing economies do need capital flows to augment their investible resources, but such flows should meet two criteria : they should be stable and be roughly equal to the economy ’ s absorptive capacity. the second reality that we must remember is that capital flows are triggered by both pull

benjamin e diokno : unlocking opportunities at the local level speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the investment forum on energy transition, 19 may 2021. * * * his excellency daniel robert pruce, british ambassador to the philippines, department of finance ( dof ) secretary carlos g. dominguez, department of energy ( doe ) secretary alfonso g. cusi, governor dakila carlo cua, national president of the union of local authorities of the philippines ( ulap ), distinguished speakers, expert panelists, and participants, good afternoon! i would like to take this opportunity to thank the british embassy manila, the dof, doe, ulap and securities and exchange commission, for co - organizing this dialogue among our key stakeholders and leading the discussion on how the country can address the challenges in its energy transition and accelerate the action moving forward. this dialogue comes at an opportune time as the country has recently submitted its nationally determined contributions ( ndc ) 1 to the un framework convention on climate change, vowing to reduce its projected carbon emissions by 75 percent by the year 2030. indeed, this development provides us a clearer direction and a greater impetus to work together in combatting climate change and ensuring sustainable development for the filipino people. in the same light, the bsp joined the “ green force ” to support the creation of a harmonized and cohesive plan in mainstreaming green and sustainable finance in the country. last march 15, 2021, the philippine financial sector regulators and authorities led by the dof signed a memorandum of understanding with the british embassy to collaborate on the implementation of proposed interventions under the united kingdom prosperity fund ’ s asean economic reform programme and the asean low carbon energy programme. respectively, these programs aim to promote economic and sustainable development as well as improve energy security and access to clean energy in the country. the program likewise supports the green force ’ s initiatives in building capacity of relevant government agencies and industry players with regards to sustainable finance implementation and in crafting a sustainable finance roadmap and principles - based taxonomy. the development of the taxonomy is a key initiative aimed at providing guidance on identifying economic activities that contribute to sustainable development, with special focus on addressing climate change impact. central to the climate change mitigation goal is the need to reduce greenhouse gas concentrations by shifting fossil fuels to renewable sources. we should note