continuity plus plus in the domestic fx market 1 mr. deng jun, bank of china manila branch country head, bank heads participating as initial members of the philippine peso - renminbi trading community, partners in the financial services industry, ladies and gentlemen, good afternoon. i am delivering this message on behalf of governor nestor a. espenilla, jr. the governor conveys his sincere congratulations to each one who toiled to bring about today ’ s landmark signing of the memorandum of agreement ( moa ) establishing a local renminbi trading market. he wishes he was here to witness this milestone. governor espenilla and the bangko sentral ng pilipinas ( bsp ) fully support the signing of the moa. it signals the start of a non - discriminatory and well - functioning trading community. it diversifies currency options and strengthens the fx market governance framework. it builds trust and investor protection mechanisms, supports product innovation and market development. continuity + + and bsp ’ s fx reforms part and parcel of the bsp ’ s continuity + + policy reform agenda is the continued liberalization and deepening of the fx market. our goal is to ensure a more organized and smoothly - functioning local fx market supportive of a flexible and market - determined exchange rate. the bsp acknowledges that a system of governance over the local fx market is key. accordingly, it has proposed a governance framework where it shall oversee the fx market pursuant to its mandate to determine the exchange rate policy of the country. the framework will allow industry players with legitimate economic reasons to establish a market in any particular currency pair. the framework will ensure compliance with laws, rules and regulations, and market - determined standards to instill discipline, integrity, and accountability among market participants and to uphold orderly market operation. under the framework, non - discriminatory prudential rules shall cover marketdetermined exchange rates, pre - and post - trade transparency and efficient settlement of the peso leg central bank money. the framework will depend on resilient and reliable infrastructure and will require effective audit and review. the bsp also envisions that there will be effective mechanisms for market participants to handle and respond to any improper practice and behavior. speech delivered by deputy governor chuchi g. fonancier, fss on behalf of governor nestor a. espenilla, jr. during the signing ceremony of the memorandum of agreement ( moa ) of the members of the philippine rmb trading community

between central banks and other regulatory authorities, within and across borders. indeed, cooperation, coordination and goodwill have become essential in the increasingly integrated system. such arrangements could include the more formal institutional arrangements for cooperation in surveillance efforts and crisis management, as well as the home - host arrangements for the supervision of international financial institutions, in supporting the early identification of risks and the pre - emptive interventions that need to be made. cross border surveillance in the asian region in particular has now been enhanced to ensure that information gaps are identified and that the mechanisms to facilitate information sharing are put in place. achieving effective inter - agency coordination between financial safety net participants also needs to be considered carefully in the context of crisis management. inevitably, the task of managing a financial crisis particularly in the areas of timely decision making, coordination and communication become much more complex when the functions of lender of last resort, bank supervision and deposit insurance are allocated to separate agencies, as each respective agency is accountable for discharging its own mandate having regard to its own inherent priorities. consequently, issues relating to information sharing, allocation of powers, responsibilities, accountability and coordination among the various agencies must be clearly and explicitly addressed at the outset. the legislative mandates would need to provide clear roles and responsibilities for each relevant authority. this will form the foundation for the adoption of an integrated and coordinated approach. the need for such coordinated action becomes particularly important in conditions of an imminent financial crisis. having in place a crisis management framework would allow for its prompt and effective implementation. the issues relating to the effective management of the inter - relationships between the safety net participants were brought to the forefront recently in the united kingdom, testing the framework in which the functions of lender of the last resort and the supervisory function are placed in separate entities. in comparison, when a single agent such as the central bank is entrusted with these respective functions, the interrelationship issue, as well as potential conflicts and trade - offs become internal and would be resolved across the organisation. it would nevertheless still need to rely on an adequate accountability regime among the respective departments or divisions that are responsible for each mandate. malaysia's own experience during the asian financial crisis exactly ten years ago allowed the central bank as a single regulator, to promptly respond to the liquidity and solvency issues that were confronting the financial system. the preemptive action that was supported by a comprehensive resolution programme significantly reduced the cost of the crisis on the financial system and the overall economy. more recently, the central banks