themselves create competitive discrepancies between different groups of banks. ii in terms of considerations of risk, an ideal capital standard should be designed to fully reflect an institution ’ s risks and to derive a capital base which takes due account of risk. at the same time, it would be desirable if this standard raised market discipline. in reality, we are still too far away from that theoretical ideal. there are differences in the measurability and hence also in the controllability of the main risks to which banks and other financial intermediaries are exposed. with the risk controlling techniques that have now been developed and on account of the availability of the input data, market risks, for example, can be measured quite accurately in most cases. by contrast, in what is still the main risk area for banks, credit risk, a purely quantitative determination of risk - comparable to market - risk modelling - is much more difficult and has not yet been achieved. for that reason, assessment of the credit risk is still strongly marked by traditional methods, i. e. the judgement of the banks ’ credit officers. as we have heard before, the efforts to improve the quantification of credit risks ( by using models ) are mainly hampered by the inadequate availability of data or their poor quality. for that reason, the recent survey on data sources by the isda to develop a reference and liquidity assessment for credit risk modelling is to be welcomed. it remains to be seen, however, whether the quality of the data in major market segments will be adequate. operational risks, too, including - for example - inadequate segregation of duties, fraud and errors in the field of data processing, are very difficult to model on account of the even greater problems concerning data. measuring these risks is therefore rather a combination of estimate and guess ; in other words, a „ guestimate “ which is largely based on data not objectively observable. iii the difficulties in risk measurement are a problem for the institutions, but also for prudential supervision for which it is difficult to define capital requirements. our existing regulatory framework aims, not least, to ensure that the institutions have an adequate cushion of capital as a protection against unavoidable losses. although this “ shield ” of capital is supposed to cover all risk factors without them being broken down in greater detail ( for operational and legal risks, too, for instance ), the calculation of the required supervisory capital is essentially geared to a single risk factor : the default risk ( and

the batch electronic fund transfer ( eft ) credit to be called “ peso net ” and following that, the real time low value push ach or “ instapay ”. our msmes will surely benefit from these initiatives by broadening their customer reach, reducing the cost of managing cash, and providing greater access to credit. 3 / 4 bis central bankers'speeches stepping and leaping together to bridge gaps while much has been accomplished, the figures on msme financing show that more needs to be done. an msme finance ecosystem that services the needs of msmes at various stages of their growth path must be in place. these services are not exclusively bank credit but involve a mix of providers and products that are suited to the msmes needs and capacities. there is an urgent need to develop financial infrastructure to support msme financing. this includes a credit information system, efficient secured transaction registries and a well - run credit guarantee system. we are also very focused in pursuing ambitious reforms to deepen our domestic debt market and to further liberalize our foreign exchange regime to make doing business generally easier. the bsp is closely working with partners in government, the private sector, and international organizations on all these fronts and will stay engaged and supportive of these important initiatives. however, coordination and collaboration of multiple players is needed. only through our cumulative efforts will msmes be provided greater and affordable access to capital and finance. this will allow them to engage in more productive, innovative, and profitable activities contributing to national development. on behalf of the monetary board and the bsp, i am very honored to share this vision of synergy and cooperation with you. let us take the steps and leap forward together. thank you and mabuhay tayong lahat! 4 / 4 bis central bankers'speeches