stable and liquid. in fact, the stability of our banking system in the midst of global turmoil has been a factor in our country finally getting out of junk status and receiving investment grade from s & p and fitch credit rating agencies. this is important. a higher credit rating generally enables a country and its corporations to have access to international capital markets at lower rates. similarly, our continuing efforts to involve and engage our stakeholders on key policy issues have produced positive results. for instance, our quarterly consumer expectations survey of 5, 000 households and business expectations survey of our top 7, 000 corporations help us formulate sound policy decisions. the continuous improvement in the quality of our surveys and our consultative approach provide a good anchor for the monetary policies of the bangko sentral ng pilipinas, the objective of which is to keep prices low and stable. in fact, when we tracked the correlation bis central bankers ’ speeches between the results of our expectation surveys with actual data on the gdp, inflation, interest rates and foreign exchange we found significantly high overall convergence. as a result, the bangko sentral ’ s policy decisions continue to provide the stability that preserves the public ’ s purchasing power and creates a planning environment conducive to strong and sustainable growth. in particular, we continue to be successful in taming inflation at low single digit levels – 2. 8 % as of june 2013, with year - to - date inflation at 2. 9 percent. and with bsp ’ s policy rates now at record low levels, average interest rates charged by banks to their customers have also dropped to single digit levels. this has benefitted consumers in terms of gaining access to more affordable credit while business is able to expand and create new jobs with lower financing costs. we are also heartened by our progress in developing a more inclusive financial system, the implementation of our nationwide economic and financial learning program, and enhancing protection for finance consumers. ladies and gentlemen. the ability to make informed financial decisions is now recognized globally as a life skill needed if one is to be successful. again, how to communicate finance lessons across different sectors, regions and age groups is a challenge the bangko sentral has taken up. finally, we observe that the resilience of our economy strongly reflects the efficient performance of our communication exchange with key stakeholders. to us at the bangko sentral therefore, efficient communication leads to transformational growth. of course, you and i know communications is always fraught with challenges. wittingly or

increasing economic, trade and financial integration and increasing interdependence, any regional financial arrangement must be structured with regard to international standards and practices. it would not be appropriate, for example, for a regional institution, if there is to be one, to prescribe medicine, along with financial assistance, that is different from those prescribed by the international monetary fund. it would immediately be seen as a soft window for financial support, thus creating moral hazard problems. i am hopeful that well - structured arrangements will emerge in due course. certainly the climate is right and the momentum is there. 14. perhaps i should take this opportunity to put the recent financial turmoil in asia in a global perspective. first, the world is in very good economic shape. world economic output is estimated by the imf to expand by 4 - 4½ % in 1997 and 1998, the strongest pace in a decade. in the oecd countries, especially in the us, there is solid growth with low inflation, while we are seeing signs of broad - based recovery in europe. only in asia have we seen a slowing of growth, but the growth rates have still been high by world standard and last year japan grew by 3. 6 %, the fastest since the late 1980s. 15. second, because of high global liquidity and low inflation, asset markets around the world are at record levels. capital flows have increased with globalization, and added to record high stock and bond prices. the fact that europe has recently raised interest rates, and the fed is considering whether to pre - emptively raise rates to prevent wage - push inflation, has made the financial markets much more nervous despite the growth environment. this explains why the financial volatility in asia has become global in nature. it is very flattering to know that hong kong can move even the mighty us and european markets, as much as the other way around. 16. third, asian fundamentals, and especially hong kong fundamentals, are strong. but there have been different degrees of strength in asia with respect to the fundamentals. the adjustments in exchange rates of currencies in this region reflect partly the market perception of fundamentals. but as i said recently at the per jacobsson lecture, there is no perfect exchange rate regime. some economists think that a shift from a rigid exchange rate regime to a free float would result in lower interest rates to ease the interest rate pain. however, recent experience in asia has shown that the market demands even higher interest