have come about through the lessons from our own past. the bsp together with the banking industry will remain steadfast in our reform effort. if we are to serve our public, we must continue to be responsive to their needs and to ensure that we act responsibly, mindful of the trust bequeathed by our public on us. the term “ fiduciary responsibility ” is not just a mantra that is conveniently brought out as the need arises but it is instead a social contract with our most basic constituent. this is the way forward and this is the high bar that must be set if we are to see responsive and responsible banking bear fruit. i have seen our market rise with resiliency when it was down. i have every bit of confidence to know that it will find the answer to the difficult questions when our present position is that of relative strength. it is after all, all about who we are who we serve, and, now is the time to show what we are made of. thank you very much and good morning.

##scores the enormity of the remaining clean - up task ahead. the incentives under the spv law expire on april 8, 2005. there isn ’ t much time left. there is a possibility of an extension on the basis of strong representations being made by the banking industry. as a practical matter, the bsp will not object to an extension, but candidly speaking, we will have serious concerns over an overly long extension that will only likely weaken the resolve to face the music. another year should be reasonable. if this results in another p100 billion in transactions, then we can see the npl ratio going down further to around 7. 5 percent in 2005. whatever extension is given by congress, all our banks that still carry large npas in their portfolio are well advised to bite the bullet soonest and clean up their balance sheets. don ’ t do it because the bsp says so. do it because it is primarily in your interest to do so. going forward, that burden can only become heavier especially as regulations evolve to force fair valuation of all financial assets in the context of migration to ias in reckoning accounts. the implementation of basle ii will also lead to heavier risk weighting on npas. in general, the prudential standards on the banking system will continue to keep rising as we seek closer alignment with international standards. we have already announced that banks should be ias compliant by end - 2005. we really have no choice on this. our ratings cannot afford it. we have likewise defined the roadmap to make the banking system compliant with basle ii by 2007. given the complexity and deep impact of these changes, it is necessary to begin preparations right away. the ultimate success of the banking reform agenda depends to a very large extent on congressional action to amend the bsp charter primarily to strengthen the institutional arrangements for banking supervision. this especially pertains to providing better legal protection to bsp personnel in the course of the performance of their official duties. other countries protect their regulators which make them more effective. hopefully, the necessary legislation will be finally delivered this year. we are also keenly advocating the enactment of a law that will enable us to establish a strong credit information bureau that will anchor a comprehensive credit information system. the benefits of this are enormous in providing wider credit access especially to small borrowers, in lowering the cost of borrowing of responsible borrowers, and in reducing the credit risk exposure of the banking system. you are also