( irc ) framework, which we introduced in 2016, should ensure more effective transmission of any monetary policy adjustments to the real economy. payments and settlements system and digitization an efficient, secure, and reliable payments and settlements system reduces the cost of exchanging goods and services. it is essential for the smooth functioning of money and capital markets. the development of accessible payment systems is also crucial towards promoting 3 / 4 bis central bankers'speeches financial inclusion. this is why the bsp continues to champion the development of the country ’ s backbone for payments and settlements. two years since its launch in december 2015, the national retail payments system ( nrps ) initiative reached critical milestones in 2017. an industry - driven selfgoverning body was established to drive the responsible development and operations of the retail payment system. further, the bsp adopted the nrps framework through the issuance recently of circular no. 980 which requires bsp - supervised financial institutions ( bsfis ) to ensure that the retail payment systems they participate in demonstrate sound risk management and efficient interoperability. one of the two priority multi - lateral automated clearing houses ( achs ) was launched. this is pesonet. through pesonet, the government, private businesses, as well as individuals will be able to conveniently initiate electronic fund transfers and recurring payments to each other ’ s transaction account. these are all part of the initiatives for the philippines to transition from a cash - heavy to a cash - lite economy. other automated clearing houses will also be launched this year, including “ instapay ”, which enables 24 / 7, real - time low - value electronic fund transfers that will support e - commerce. the bsp has also set its sights on digital innovation to reach the financially unserved and underserved. for this reason, we support the inter - agency initiative to establish a biometric national identification system to improve the accessibility and delivery of financial services. we realize this will require a responsive security management framework to help guard our financial system against cyber - threats. in this regard, we have upgraded our preparedness. 2018 and beyond : taking on challenges characteristics of strength, resilience and the capability to innovate will come in most handy as we navigate through the challenges this year. an alarmist mindset is not necessary as we draw from our experience. at the bsp, we try very hard to be pro - active. we carefully survey the landscape for potential threats. we ensure

no longer be subject to reserve requirements as these are no longer effectively considered as deposit substitutes. we expect uitfs to eventually evolve into major institutional investors in the capital market competing against mutual funds and other collective investment schemes. we are also intensifying our coordination efforts with other financial regulators so that we can achieve a more level regulatory playing field. in july 2004, a memorandum of agreement was signed by the bsp, the securities and exchange commission ( sec ), the insurance commission ( ic ) and the philippine deposit insurance corporation ( pdic ) to formally establish a financial sector forum ( fsf ). this further enhances coordination arrangements among the concerned agencies, particularly with regard to more effective supervision of financial conglomerates, to information exchange, and to consumer protection. aside from developing a more conducive regulatory environment, we are helping develop appropriate market infrastructure. in this regard, we are strongly supporting the private sector initiative, led by the bap, to establish the fixed income exchange and its related infrastructure to ensure efficient and safe clearing and settlement of securities transactions. finally, our reform initiatives are benefiting from the support of congress which has decisively acted on certain vital pieces of legislation including the elimination of dst on secondary trading, the spv law and the asset securitization law. all of these measures will help spur the domestic capital market. the bsp has worked hard with other interested partners to get these laws enacted and we will continue to do so for other pending legislation that support capital market development. although much progress has already been made, the work is still far from over. the bsp will continue to push for more reforms in the financial system, specifically : ( 1 ) a special legislation to support a strong credit reporting system ; ( 2 ) the enactment of a more balanced bankruptcy resolution framework ; and ( 3 ) the enactment of the proposed changes to the bsp charter to strengthen our ability to clean up the banking system and properly enforce prudential standards. we particularly attach great importance to the amendment of the bsp charter. unless we are able to properly police the banking system with sufficient powers, we will be constantly plagued by a vulnerable banking system. a vulnerable banking system will not be responsive to our financing needs. and because banks play important roles in support of the capital market whether as investors, underwriters, managers, market makers, issuers and guarantors, a weak banking system will also hamper their development of the domestic capital market. conclusion the