are resilient and therefore less vulnerable to domestic and external uncertainties. ii. the challenges to monetary policy formulation on the part of the bsp, we formulate monetary policy against an assessment of global and domestic economic issues and developments. we are mindful of the range of circumstances in recent times which draws important challenges for philippine monetary policy. plentiful global liquidity. the strong foreign exchange inflows into asia. the build - up of international reserves. the marked appreciation of regional currencies against the us dollar. financial innovations. yield - seeking activities of agents, and now more recently, a reassessment of risk appetite and repricing of risks. a possible further tightening of global credit conditions. the fragility of us growth. volatile oil and commodity prices. all these challenge us as we endeavor to provide a sound monetary policy environment, while advancing reforms that promote growth and respond to changes in global financial conditions. our resolve to follow good governance and international best practices in our reform agenda has provided us the discipline necessary to craft appropriate responses and avoid steps that could distort rational market behavior. iii. the courses of action let me put forward three essentials in response to these challenges. one, we will remain focused on achieving our inflation target. our monetary policy will continue to be responsive and forward - looking. our inflation targeting approach has proven to be effective as a monetary anchor and provides us with an array of policy tools against turbulent economic and financial conditions. two, we will maintain our market - determined exchange rate policy, while complementing this with a liberalization of our foreign exchange regulations to allow greater access to foreign exchange for outward investments. we have already put out the “ first wave ” of fx liberalization measures, a “ second wave ” will be implemented before the end of the year. third, we will continue to undertake steps to strengthen the domestic financial system and help manage risks attendant to financial market developments. in the banking sector, we are focused on good governance, asset - clean up, capital build - up and industry consolidation. we want to see stronger, well - governed, better - capitalized banks that would be effective channels of monetary policy. in other words, stable financial institutions that perform the intermediation function between the sources and users of funds, fully cognizant of the risks attendant to this role. as driven by the changing profit dynamics brought about by our adoption of international accounting and the basel ii capital adequacy standards

eli m remolona : message during the release of the 2023 financial stability report message by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the release of the 2023 financial stability report, manila, 13 february 2024. * * * magandang umaga sa inyong lahat! i thank everyone for making time to join us here in the bsp [ bangko sentral ng pilipinas ] on a tuesday morning. tomorrow is valentine's day, and we will speak about love and roses! but today, let me talk about the danger of rosy scenarios. today, we present to you our 2023 financial stability report ( fsr ) - an fscc [ financial stability coordination council ] communication tool for managing systemic risk. what is our fsr? it is a report published at least annually, pieced together from the collective wisdom of the fscc, from suggestions by the bsp's monetary board and the fscc agency - offices, and from inputs from other participants of our financial system. the reason for the fsr is that we want to communicate to participants of the financial system to help them make better - informed decisions, and maybe tell us what we may have missed. the challenge is that systemic risk is inherently difficult to comprehend. markets are fluid, and things can change very quickly. some risks arise from our own markets and some risks in foreign markets can spill over onto our shores. the risks that are of the biggest concern are those that are brewing in out - of - sight vulnerabilities, risks that turn out to be contagious and to lead to broader dislocations. you have heard of " black swans " indicating highly unlikely surprises or " the butterfly effect " to describe how small things can lead to far - reaching consequences. these are the things we worry about. indeed, financial market participants often make risky investments based on rosy scenarios. the more widely shared the scenario, the more dangerous it is. when something goes wrong in these scenarios, it sometimes leads to mass panic. there is a rush for the exits, causing massive investments to collapse. this is no idle theory. 1 / 2 bis - central bankers'speeches in 1993, the world bank published a volume called the east asian miracle. it told a rosy scenario about our neighbors, including indonesia, malaysia, thailand, and