have made very deliberate choices to continue to lend bulk of their funds to the relatively capital - intensive productive sectors of the economy, i. e., the manufacturing and real estate sectors. our surveys show also that even as banks have increased their lending activities, they have not relaxed their lending standards. we are confident that given the current regulatory environment and the banks ’ observed risk appetite, banks will continue to be discriminating in the projects they will fund. indeed, there is room to grow further in this respect, given our ratio of credit to gdp remains below that of our peers in the region. on strong asset prices – we do not yet see asset bubbles forming. but developments bear watching. our assessments show that demand for real property assets continues to be based on fundamentals, i. e., there is real demand from ofws, expatriates, and the bpo sector. the demand is also indicative of the increase in the incomes of these sectors, as well as the growing young professional segment of the economy. the changing lifestyle of these workers has led to an increase in requirements for housing near the workplace during the week as they go home to the province only on weekends. the bsp has been “ criticized ” as fuelling a credit and asset bubble through low interest rates. i would say, this view is rather narrow. the bsp has reduced its policy rates to support growth to the extent the inflation outlook has allowed it to. in addition, we have deployed macroprudential measures during the early stages of strong capital inflows and even earlier to help tighten regulatory screws. these include concentration limits on real estate lending, limits on open fx positions, and higher risk weight for ndf transactions. the bsp is mindful that there are many moving parts to the economic equation, and we will always consider the financial stability implications of our policy actions. what is our game plan for dealing with these issues and their attendant risks? the country has sufficient policy space to deal with external shocks and their spillovers to the domestic economy. for one, the benign inflation environment affords the bsp the flexibility to fine - tune policy settings, as necessary, to support the domestic economy. the emerging estimates over the policy horizon continue to show within - target inflation. therefore at this time, policy settings appear to continue to be appropriate. even as inflation is within our comfort zones, we have it at the front burner. our commitment to price stability is not only for its

rafael buenaventura : raising the bar on consumer banking service speech by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the bank marketing association of the philippines ’ ( bmap ) 30th anniversary of upgrading bank - marketing practice, makati city, 26 august 2004. * * * introduction distinguished officers and members of the bank marketing association of the philippines ( bmap ), follow bankers, ladies and gentlemen : good evening. i am deeply honored to take part in this celebration, marking bmap ’ s 30th year of upgrading bankmarketing practice in the country. this year ’ s theme of “ customer service in the marketing mix of financial products ” rightly emphasizes the importance of banks ’ clients in influencing an institution ’ s success. consumer banking over the last couple of years, the philippine banking system has experienced strong growth in consumer banking services. credit card receivables for example, grew by an average 25. 2 percent annually from 2000 to 2003. this has allowed more ordinary people without access to credit to now have access and on clean basis. however, this growth has also come with a price in the form of increased volume of bad accounts. many of the problems were traceable to the fact that some new cardholders did not really understand the obligations and responsibilities that came with them. as a result, past due credit card accounts rose an average 40. 4 percent, a pace much faster than the new ones granted. the number of credit card - related complaints also rose dramatically. it is in this regard that we should work hand in hand in channeling more efforts towards customer education and protection. for its part, the bangko sentral ng pilipinas ( bsp ) issued various regulations geared towards protecting both the industry and the public. for instance, in 2002 we issued circular no. 349 which significantly tightened rules on credit card and other lending operations by requiring banks and their subsidiary credit card companies to ascertain that cardholders are capable of fulfilling their commitments and by setting credit limits based on their net take home pay. moreover, the bsp took a more proactive stand by creating the consumer education committee in january of this year to help improve basic financial literacy. i commend bmap together with the credit card association of the philippines ( ccap ), the bankers association of the philippines ( bap ), the chamber of thrift banks ( ctb ) and the