the midst of poverty, seen lives change for the better, and communities grow in the process through the transformative power of microfinance. i am pleased to report to you that as of december 2006, total outstanding loans of 212 banks to more than 650, 100 microfinance borrowers had exceeded p4 billion. also as of december last year, these borrowers had accumulated modest savings averaging p2, 000 ( two thousand pesos ) each or a total of about p1. 4 billion! but, ladies and gentlemen, you and i know there is still so much more that needs to be done. millions of filipinos still live in poverty, without access to financial services that could empower them to better their lives. there is therefore an urgency to sustain our momentum, to bring microfinance to where it is needed the most, and thereby make a difference in uplifting the quality of life of our entrepreneurial and industrious poor. in this regard, we thank all those involved in the microentrepreneur of the year awards for providing our future microentrepreneurs the hope, and the inspiration, that they, too can have better lives with their families and with other members of their community through microfinance. mabuhay ang microfinance! marami pong salamat sa inyong lahat.

find ways to strengthen their ability to compete with the big banks, including via mergers. the following serious questions arise in the course of discussions of the capital market reform : a. the stability of the banking system. i think that this will not be affected by the separation of the provident funds and mutual funds from the banks. the stability of the system depends on the quality of the asset portfolios held by the banks and the manner in which they manage them. i believe that when the banks focus on classic banking they will manage their portfolios even more efficiently than they do today. i am not saying that the banks are inefficient now ; i am saying that they will become even more efficient. b. the stability of the financial system. in this regard too i see a great advantage in separating the funds from the banks. during the severe global financial crises in the 1990s we discovered that the broader the range of financial institutions a country had without any institution being dominant, the more stable was its financial system. this is the case because a problem experienced in one sector did not roll over into other sectors, and the system benefited from the flexibility to act efficiently. when our financial system is more diverse, we can have greater confidence in it. c. the concentration among banks. it is true that from the customers'point of view, initially there will not be any great changes. nevertheless, the reform will reduce the dominance of the large banks in relation to the others, and this will eventually be reflected in a more competitive system. one important aspect of the bill placed before you as part of the reform of the capital market is the supervisory aspect. it is clear that this subject comprises an important basis for the reform of the capital market. on the one hand we hope to create a foundation in which the market – – when it is competitive and free from conflicts of interest – – will constitute an effective supervisory mechanism, but on the other hand we must strengthen the supervisory setup in order to ensure that the capital market really is more competitive and free from potential conflicts of interest. we therefore suggest that within the framework of the proposed legislation that you are considering, the banking ordinance should incorporate the authority of the supervisor of banks to issue directives on the proper conduct of banking business. this he would do after consultation with the bank's advisory committee and with the approval of the governor. with regard to the concentration in the banking system, the supervisor of banks is working to make it easier to move from one