, resulting in greater reliance on remote work, reductions in nonessential travel, and changes to cre usage and valuations. - 7in downside scenarios, there could be some persistent damage to the productive capacity of the economy from the loss of valuable employment relationships, depressed investment, and the destruction of intangible business capital. a wave of insolvencies is possible. as the federal reserve board ’ s may financial stability report highlighted, the nonfinancial business sector started the year with historically elevated levels of debt. 10 already this year, we have seen about $ 800 billion in downgrades of investmentgrade debt and $ 55 billion in corporate defaults — a faster pace than in the initial months of the global financial crisis. several measures of default probabilities are somewhat elevated. it remains vitally important to make our emergency credit facilities as broadly accessible as we can in order to avoid the costly insolvencies of otherwise viable employers and the associated hardship from permanent layoffs. finally, in keeping with the global nature of the pandemic, foreign developments could impinge on the u. s. recovery. the international monetary fund estimates that real global gross domestic product dropped at an annual rate of about 18 percent in the second quarter after falling nearly 13 percent in the first quarter. while the potential for a fiscal response across the euro area is positive and important, there has been some renewal of tensions between the united states and china, and the outlook for many emerging markets remains fragile. the federal reserve moved rapidly and aggressively to restore the normal functioning of markets and the flow of credit to households and businesses. the forceful response was appropriate in light of the extraordinary nature of the crisis and the see board of governors of the federal reserve system ( 2020 ), financial stability report ( washington : board of governors, may ), https : / / www. federalreserve. gov / publications / files / financial - stability - report20200515. pdf. - 8importance of minimizing harm to the livelihoods of so many americans. with the restoration of smooth market functioning and credit flows, our emergency facilities are appropriately moving into the background, providing confidence that they remain available as an insurance policy if storm clouds again move in. while it is welcome news that 7. 5 million jobs were added in the past two months, it is critical to stay the course in light of the remaining 14. 7 million job losses that have not been restored since the covid

development of a strong industrial base in the country. with a well - represented industry sector, ffcccii could easily push for a roadmap toward a stronger and more diversified industry sector across various lines and regions nationwide. this project could certainly lend support to one of the government ’ s key concerns : employment generation in the domestic economy. 4. investment in human capital. i know that the ffcccii has been keen on pursuing programs and projects aimed at promoting education. these include construction of barrio schools and provision of scholarship programs to elementary and high school students in chinese - filipino schools. i encourage you to expand existing programs in this area. bis central bankers ’ speeches these are only a few of what i have in mind, but i am sure that the ffcccii could contribute a lot more in terms of programs and projects geared toward nation - building, on top of what the federation has already been doing in the past. bsp ’ s policy directions going forward ladies and gentlemen. we are seeing many positive developments but the agenda is definitely not done yet. we need to take a holistic view and pursue the prudential path towards financial stability. i realize that to many of you, financial stability may sound to be such a high - level objective that is detached from the ground. in reality, this prudential objective has a direct bearing on all of us. financial stability means that we will continue to set monetary policy with an inflation anchor that is consistent with the needs of the broader macroeconomy. in particular, the bsp sees interest rates remaining low over the policy horizon, given a manageable inflation outlook. foreign exchange inflows are expected to continue, although we see flows coming in at a slower pace than before. therefore we expect the peso to remain well - supported. financial stability also means a stable and sound banking sector that actively promotes inclusion, provides for non - traditional delivery channels of financial services, and protects the interests of the saving public. in particular, the bsp will continue with the banking reform agenda, including the adoption of basel 3 capital adequacy standards in january 2014. finally, financial stability must then mean that we have an efficient payments system that is responsive to the business needs of the community as well as in providing the needed market infrastructure for investors. conclusion ladies and gentlemen, the 2012 macroeconomic performance of the philippine economy has set a significant standard for the country. while challenges remain and continue to pose risks to the economy