of instruments has to do with capital adequacy. however, this is not enough, and it is no trivial to judge the soundness of the financial system by its capital and leverage levels. higher levels of capital will certainly have to be required in the future, particularly as banks gradually assume higher levels of risk. such is the spirit of the basel ii standards, but this crisis has proved they do are not enough. it will be necessary to examine how capital requirements and accounting norms may have amplified the financial crisis, and what must be done to avoid the excessive procyclicality of the banking activity. fortunately this has not been a problem in the financial systems of colombia, chile and the rest of the region, where regulatory schemes worked. banks are adequately matched in terms of currencies, an aspect that used to be the achilles heel of our banks. central banks must strengthen and perfect the models with which they carry out their stress tests. they should take into account the interconnections within the financial system and detect vulnerabilities opportunely. we have seen how the u. s. investment banks, insurance companies and other non - banking agents of the financial system played a leading role in the origin and spread of the crisis, but were not at the heart of the banking supervision network. of the many aspects that may be debated with respect of the financial system, there is one that should be singled out, especially to the extent that banking systems of emerging economies continue along the lines of financial innovation. it is important to allow securitization, but establishing incentives for both credit screening and monitoring of payments to remain at the banks and that the process of transferring credit risk away from individual institutions ’ balance sheets does not escape the authority ’ s eye. the current crisis should not become a hindrance to financial development, but a sign of alert in favor of prudence and rigor when assessing the innovations. thank you very much. references batini, n. and e. nelson ( 2000 ), “ when the bubble bursts : monetary policy rules and foreign exchange market behavior, ” mimeo, bank of england. bernanke, b. and m. gertler ( 1999 ), “ monetary policy and asset price volatility, ” in new challenges for monetary policy, proceedings of the jackson hole symposium 2005, federal reserve bank of kansas city, pp. 77 - 128. blinder, a. and r. reis ( 2005 ), “

benjamin e diokno : the bangko sentral ng pilipina's response to the covid - 19 pandemic speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at an investor call with standard chartered bank, manila, 22 april 2020. * * * good day, everyone. thank you for the opportunity to share the central bank ’ s views on the macroeconomic developments and prospects for the philippine economy amidst the ongoing pandemic. as aptly explained by finance secretary dominguez, the philippines was on a positive rating trajectory before the global health crisis started. its strong track record of prudent policymaking has led to robust external balance sheet, healthy public finances, and positive macroeconomic performance seen in recent years. the country ’ s strong fundamentals has provided a degree of resilience during the current pandemic shock. the development budget coordination committee estimates real gdp growth would be flat or would contract slightly in 2020, incorporating the adverse effects of covid - 19 on the supply and demand sides of the economy. however, domestic activities are expected to resume once containment measures are lifted and a full recovery is expected in 2021. the extension of the enhanced community quarantine measures until april 30 will have a negative impact on domestic economic activity. likewise, the spillovers from slower global growth, tourism, foreign investments, trade, and overseas filipino ( of ) remittances are expected to further worsen domestic growth. all in all, the bsp expects a u - shaped recovery with growth accelerating once the community quarantine is lifted and the necessary measures intended to stem the spread of the virus are fully implemented. gdp could also recover more strongly once the fiscal and monetary stimulus gain traction and workers and firms resume operations. the bsp has undertaken an aggressive monetary policy response to address the adverse spillovers associated with the ongoing pandemic. with a manageable inflation environment and stable inflation expectations, the monetary board sees enough policy space for an assertive reduction in the policy rate to cushion the country ’ s growth momentum and uplift market confidence amid stronger headwinds. the monetary policy easing is also aimed at ensuring adequate domestic liquidity and credit in the financial system as well as lowering borrowing costs for affected firms and households. following the implementation of liquidity - provision measures by the bsp, domestic liquidity has improved in recent weeks as shown by overs