industry ’ s investment management activities as new clients with lower amounts of investible funds can now be tapped. financial inclusion was a major consideration in crafting this policy amendment. we want to make investing more accessible, while providing retail investors with a greater degree of protection. we are confident that these investors will benefit from the expertise of trust entities and that trust entities would continue to exercise prudence in the way they offer their services. economic update to provide a big picture on what lies ahead, let me proceed with an update on the economy and the banking system. 1 / 4 bis central bankers'speeches the economic, social and health effects of covid - 19 are unprecedented. they disrupted economic activity globally. the philippines was not spared : its economy contracted by 9. 5 percent in 2020, its first fall since the 1998 asian financial crisis. but one can argue that the contraction could have been worse had the philippine economy not entered the crisis in a strong position. the uninterrupted economic growth for over two decades prior to the covid - 19 pandemic, the timely structural reforms, the generally manageable inflation, and the hefty gross international reserves – all these have helped cushion the adverse effects of the health cum economic crisis on the domestic economy. our key economic indicators remain encouraging. inflation inflation is manageable and inflation expectation remains anchored. while inflation rates have risen in recent months, they were driven mainly by faster price increases of key food items and higher domestic oil prices. but the upticks in inflation are consistent with bsp ’ s assessment that inflation will remain elevated in the coming months before decelerating in the fourth quarter of the year. inflation is projected to return within the government ’ s target range of 3. 0 percent ± 1. 0 percentage point over the policy horizon. monetary policy will continue to support the various interventions of the national government to alleviate the impact of supply - side factors on consumer prices. balance of payments ( bop ) the country ’ s external position has caught up well despite the weak global demand in 2020 amid the synchronized recession of our major trade and investment partners. for full - year 2020, the overall balance of payments ( bop ) position was at an all - time high of us $ 16. 02 billion. for 2021, we project the balance of payments to be us $ 6. 2 billion or 1. 6 percent of gdp. gross international reserves ( gir ) meanwhile, the country ’ s gross international reserves ( gir ) level remains

susan schmidt bies : the continuous challenges of risk management remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, at the financial services institute, washington, dc, 2 february 2006. * * * the continuous challenges of risk management i thank you for the invitation to speak today. my remarks will focus on the continuous challenges banking organizations face as they manage risk. today, banking organizations have a much wider array of risk - management tools and practices available to them, thanks in large part to innovations in financial products and services, improved technology, and many other developments in the industry. but financial innovation also presents new and different aspects of risk that institutions need to address. i will first describe some of the broader risk management issues facing banks. then, i will describe some guidance supervisors have recently issued to illustrate the importance of these concepts. i know that a number of attorneys who work on banking and financial matters are in the audience, so i will cover not only risks relating directly to lending and trading activities but also those relating to legal and compliance issues. dimensions of risk - management challenges certainly, risk management is not a new challenge. financial institutions have always faced the task of managing their risk exposures while remaining profitable and competitive. but financial innovation, even when it involves well - established products and exposures that are only slightly altered, continues to present new risk - management challenges. yet challenges are also opportunities : good risk management is an art that combines the ability to use financial innovation to improve profitability with an understanding of how risk profiles change as a result of that innovation. the federal reserve, in its role as both a bank supervisor and the nation ’ s central bank, has an obvious interest in maintaining the stability of the banking industry and the financial system as a whole. we, along with our counterparts at the other u. s. bank and thrift regulatory agencies, are responsible for ensuring that banking institutions operate in a safe and sound manner. but with the advent of very large banking organizations that engage in a wide variety of business activities - - some of them quite complex - - the federal reserve has become even more interested in ensuring that banking organizations understand the risks of these activities as well as their potential impact. as organizations grow larger, one of their major challenges can be described as making sure that the “ right hand ” knows what the “ left hand ” is doing. in other words, risks must be recognized and managed across the entire organization. in some cases,