for calibrating economic activity and maintaining price stability. a fundamental initiative of the bsp to support capital market development is the shift to inflation targeting, and the higher level of policy transparency that it requires, as basis for the conduct of our monetary policy in achieving price stability. a stable price environment is a central pillar towards securing overall macroeconomic stability, in turn a necessary pre - condition to capital market development. although recent acceleration in inflation has been mostly supply side driven, the bsp remains very cautious with its monetary policy stance while retaining the flexibility to support economic growth. this is the usual balancing act that is the traditional measure of the mettle of a central bank. but preserving price stability is really a cooperative endeavor and the government has responded with measures to mitigate supply - side pressures through increased price monitoring of staple foodstuff, ensure supply of commodities through higher productivity in agriculture and industry, and lessening dependence to imported fuel and energy prices. the bsp has launched major reform initiatives in the banking sector where we have direct responsibility as its supervisor. key initiatives include strengthening corporate governance and transparency, clearing - out non - performing assets and strengthening bank balance sheets through better liability management and recapitalization, upgrading risk management standards, and improving consumer protection. consistent with these objectives, we have been systematically aligning our regulations with key international standards such as the basle committee recommendations on supervisory practices and on capital adequacy, the ias / ifrs standards for the proper accounting and disclosure of financial transactions, oecd principles on good corporate governance. we are likewise closely consulting with our peer central banks and bank regulators to learn from their rich experiences. these have yielded a slew of regulatory changes and others yet to come that will radically change the rules of the game for our banking industry. for the better, we are convinced. we believe that the changes will also further hasten the long overdue consolidation in our banking industry that is essential to make it stronger. the rigors of international standards and the growing presence of international level competitions will inexorably hasten the exit of weak institutions that are unwilling to reform. the proposed amendment of the bsp charter is a very critical element in the banking reform agenda. we are particularly seeking changes to strengthen the institutional arrangements for banking supervision that will enable us to fully comply with best international practice. the most critical changes include strengthening the basic legal protection of bank supervisors in the course of performing their official duties and improving the ability of the bs

. this agenda certainly reflects that financial inclusion is multi - faceted. implications of financial inclusion indeed, financial inclusion cuts across multiple macroeconomic goals. financial inclusion has been seen to contribute to broad - based economic growth and development ; as well as complement other policy objectives such as reducing inequality and promoting financial stability and integrity. financial inclusion also has important implications for monetary and financial stability policy. these are bold claims, yet the work of many of you in this room have strengthened these convictions through your academic work in collecting and analysing evidence, some of which we will have the opportunity to discuss in this conference. ( e. g., from professor beck ’ s early work in looking at financial intermediation and growth ( 2000 ) and more recent ones on finance, inequality and the poor ( 2007 ) to dr. hannig ’ s discussion on financial inclusion and financial stability ( 2010 ) and professor karlan ’ s numerous work on looking at impact of credit ( 2007 ) or other financial services in households. ) in no small measure therefore, you have contributed to what could be likened to an evolution : a gradual – yet almost natural – advancement of financial inclusion as a widely - accepted policy objective. in this conference, we hope to further enrich the discourse through exchanges among central bankers and our select group of experts and see how we can pursue financial inclusion as a complement to our primary responsibilities as central bankers. a good way of achieving this is, to keep in mind that while financial inclusion has benefits, it also brings changes to the nature of the risks we face. two that come top of mind are : 1 ) changes in the behavior of market participants ; and 2 ) changes in the design and delivery of financial products. related to these is a third, that is, the potential changes in the reaction function of policy makers. to illustrate the first kind of change – the change in market behaviour. newly - included agents may not necessarily behave in the same manner as those who are “ already served ” and “ have been served ” for some time now. because banks are more familiar with the latter, the melding of the two client bases may create new operational challenges for the banks ’ frontline staff. change in agent behavior also affects monetary policy. mehrotra and yetman ( 2014 ) argue that when more clients are able to smooth consumption, authorities have more monetary policy space to concentrate on fighting inflation. the underlying principle is that smooth bis central bankers ’ speeches consumption patterns help reduce the cost of