benjamin e diokno : financial digitalization - harnessing potentials for a better post - covid philippine economy speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the hsbc “ asean next – dialogue on digital banks ”, 30 november 2021. * * * ladies and gentlemen, a pleasant day to all of you. i thank hsbc for inviting me to speak in your “ asean next — dialogue on digital banks ”. the covid - 19 crisis has brought enormous challenges for economies worldwide. we at the central bank are harnessing the potentials of financial technology to help achieve full recovery and realize a stronger post - covid philippine economy. following the 12. 0 - percent rebound in the second quarter, the economy grew by 7. 1 percent, the highest among asean nations. the further de - escalation of alert level and easing of mobility restrictions nationwide, but especially in the national capital region, would help restore jobs in the last quarter of this year. based on google mobility, we continue to see significant progress in mobility versus last year. the economic recovery is being supported by positive developments on the monetary, external and banking fronts. price movement is manageable, providing an enabling environment for pickup in consumption and investments. looking ahead, inflation could settle above the 2 to 4 percent target this year on account of supply - side pressures but is expected to revert to the target range in 2022 and 2023. external trade has recovered. from january to september, exports grew by 18 percent, while imports grew by 30. 3 percent. meanwhile, foreign direct investments jumped almost 40 percent in the first eight months of the year with the bulk coming from manufacturing and financial services. our external payments position remains strong. as of october, the gross international reserves stood at us $ 108 billion. this is equivalent to almost 11 months ’ worth of imports of goods and payment of services and primary income. the conventional wisdom is that 3 months ’ worth of imports is sufficient. let ’ s now move on to the philippine banking sector ’ s performance. benefitting from regulatory reforms of the past two decades, banks in the country have built resilience to shocks. while the pandemic caused a rise in soured debts, asset quality remains sound. banks also have ample buffers against credit losses. for one, philippine banks have generally observed prudent lending standards amid sound regulatory environment

on the national accounting standards, adjusted for the microfinance activity. we retain current regulatory framework, after some expected changes and approval, is adequately monitoring microfinance activity in albania while not becoming an impediment for its development. while acknowledging the role of the microfinance as an important tool for ensuring development opportunities to small businesses that otherwise may never access financial resources, one should keep in mind that microfinance is sound if it is provided by sound institutions. there is not much benefit if such institutions fail because of lenience of their internal rules and procedures, and / or because the supervisory authority has closed an eye on them because of their social role. this will also make other institutions become hesitant in engaging in microfinance. the relationship between the microfinance institutions and the banking sector regarding their interaction in the economy financing, is a delicate issue. their coexistence is certainly “ peaceful ” at the early development stage of at least one of these groups of institutions, but as the economy grows and competition increases, they tend to move toward each - other. at that stage, it is important to pay special attention for ensuring clear “ rules of the game ” for their activity and to provide adequate policies that allow for structural reforms of these institutions and of their market influence. in conclusion, microfinance is a very important mean to achieve a balanced economic growth, by providing financial support to small and medium businesses which are vital for the medium and long term economic growth. compared to some other countries in the region, microfinance in albania have shown higher growth rates with good quality. however, there is ample room for enhancing it further. maintaining a stable macroeconomic environment, and the improvement of the level for a better law and order, and land and property rights, fair competition, are very important factors that will improve business financing in albania. as supervisory authority we will try hard for microfinance future growth to be sound. the credit bureau project that our bank is undertaking shortly is also expected to boost credit through ameliorating information problems. thank you for your kind attention.