##ity, and profitability. outlook and assurance of continuity. 2017 ended on a solid footing for the philippine economy and we kicked - off 2018 in high gear. as we move forward, the bsp remains optimistic and vigilant. our primary challenge concerns risks to the inflation outlook given external headwinds. the unwinding of accommodative policies in advanced economies could have knock - on effects, contributing to potential capital outflows from emerging economies like the philippines. nevertheless, despite some uncertainty in oil market prices, production outages and geopolitical concerns, we expect commodity prices to remain broadly stable in the coming months. our inflation forecasts are being updated to consider the recent increase in crude oil prices, implementation of the tax reform program and peso movement. we remain vigilant and ready to timely respond to second - round effects and possible shifts in inflationary expectations. 1 / 3 bis central bankers'speeches the bsp also endeavors to maintain a sound and stable financial system, monitoring for signs of excessive credit and leverage. we are building on existing frameworks for market surveillance to take appropriate action. we will continue to pursue proactive prudential reforms. earlier this month, the monetary board approved the adoption of minimum leverage ratio requirements. these will take effect on july 1, 2018. we will complete roll - out of the liquidity management framework, including amendments to the basel iii liquidity coverage ratio ( lcr ) standard ; issuance of complementary minimum liquidity ratio and net stable funding ratio standards ; and intraday liquidity reporting guidelines. financial market efficiency in a growing economy. one theme that you should expect to see from our reform agenda is market efficiency. it is important that markets discover prices on their own and for self - correcting mechanisms to be encouraged. we are confident that this will increase financial markets ’ abilities to absorb shocks … so that the bsp can focus on its core mandates. notably, banks have provided resilience and support for economic growth throughout the years. but we also believe in developing a deeper domestic debt market to support long - term funding needs of the economy and diversify risks within the financial system. this year, in coordination with other government agencies, industry associations, and market participants, we are rolling out remaining initiatives under the philippine local currency debt market development roadmap. relatedly, we are closely tying - in the reform of reserve requirements with broader debt market reform to allow efficient absorption of liquidity and their mobilization to

our work must aim to do the following : ( 1 ) make crises less likely, and ( 2 ) – given that we cannot prevent every crisis – make banks as crisisproof as possible and feasible. over the last decade, we have gone to great lengths to cast these lessons learned into an improved regulatory framework. our post - crisis reform agenda had many boxes to tick : increasing the quality and level of capital ; enhancing risk capture ; 1 / 5 bis central bankers'speeches constraining leverage and excessive concentration ; adding a macroprudential dimension to the regulatory framework ; addressing liquidity risk ; ensuring the resolvability of banks to allow them to fail without putting the entire system at risk. 3. the “ grand finale ” : basel iii the “ grand finale ” of these efforts, you could say, was the finalisation of basel iii just one week ago – despite all the prophecies of doom. large parts of the reform had already been agreed upon as early as 2010. at that point in time, the basel framework had already made a huge leap compared to its earlier versions. and some on - lookers back then probably felt that the finalisation of the reform package was imminent. but in the end, it took us about seven more years to finalise basel iii. why did it take so long? in my view, the answer is twofold. first, we had to balance multiple, intertwined goals – and we didn ’ t shun the details. there were plenty of open questions. do the new rules distort risk - taking behaviour? do they truly resolve threats – or simply shift problems? how can we level the playing field for a diverse global banking sector? and so on. all the members of the basel committee knew that if we didn ’ t genuinely address all of these questions, we would risk seeing unintended consequences sooner or later. so the finalisation package was about achieving a balanced overall set of rules. this required us to review every single rule with great thoroughness. and this is basically what we did in the past years until we arrived at the final result unveiled last week. i don ’ t intend to bore you with the details of the reform package, so let me mention just one aspect. the most hotly debated topic around the finalisation package was its effect on minimum capital requirements. the result is that, for individual financial institutions, there will be some changes in minimum capital requirements. but at the global level, the final