will be introduced for leverage, liquidity, the handling of market risks that lead to credit risks, the treatment of securitization and inter - financial exposures, and mitigating counterparty risks, among others. beyond the basel accord, the distinction between otc and exchange - traded derivatives is effectively being removed to ensure price transparency and improved governance. payment systems are now governed by new principles set for providers of so - called financial market infrastructures ( fmis ) while the use or non - use of these fmis by market players will have consequences. there are many other reform initiatives that could be cited. at the end of the day though, all of these are geared to the common purpose of achieving financial stability. we will have every opportunity to discuss how high to set the prudential bar but the principles behind the change in the global standards are difficult to ignore. capital market development : moving beyond the usual rhetoric apart from the global initiatives, we do have our own set of concerns. capital market development has been in and out of vogue through the years. however, many unresolved issues remain and this is our second major challenge. the capital market blueprint prepared under the auspices of the securities and exchange commission headed by chairperson herbosa is the take - off point. i urge the stakeholders to look carefully at the blueprint and commit to the deliverables within their purview. from the perspective of the bsp, a few specific issues are most critical. who will disagree with the proposition that benchmarks are central to our market and its operations? whether it is to price a new issue or value / re - value an existing exposure, the role of benchmark rates simply cannot be over - stated. despite many initiatives and formulations, we remain well - short of a viable yield curve that properly reflects credit and bis central bankers ’ speeches liquidity risks. we have all heard of ois, implied zero rates and single price as the latest round of initiatives towards an acceptable yield curve. we look forward to having these initiatives come to fruition, hopefully by end - year. the role of clearing entities and similar dis - interested 3rd parties will also be critical. a part of this goes back to the issue of valuation. at this juncture, we do need to think about the broader policy framework for our market infrastructure. to execute our capital market agenda, these are the areas that need to move beyond rhetoric. taking the challenges forward ladies and gentlemen, the past

and has dipped to 2. 8 % in june this year. and together, the bangko sentral ng pilipinas and the banking sector have successfully evolved to meet the growing and changing needs of our country and our people. total resources of the banking system for instance increased from more than p1 trillion in 1993 to over p8 trillion in 2012, deposits from p649 billion to p5. 8 trillion, and loans from p553 billion to p4. 1 trillion. over the same period, our gross international reserves soared from $ 5. 3 billion to $ 81. 6 billion as of june this year, giving us the ability to provide the foreign exchange needs of our growing economy and to minimize the possible impact of external shocks. our healthy bis central bankers ’ speeches gir levels also allowed us to prepay our debts to the imf and end more than forty years of our country ’ s dependence on imf loans in 2006. thus, when the 2008 global economic crisis came around, we were able to ride it out. in fact, while credit freeze became the norm in developed countries, philippine banks remained liquid and able to sustain double - digit growth in lending. and non - performing loans of commercial and universal banks dropped from double - digit levels to 1. 87 % in may 2013, even better than the pre - asian financial crisis figures. looking back, i think it is because we have a good balance of prudential regulations from the bangko sentral on one hand and on the other adherence to sound banking practices by our banks. in other words, the sound and stable philippine banking system that we see today is the dividend from our continuing reform agenda to clean up bank balance sheets, strengthen bank capitalization, improve governance structures, enhance risk management systems, and align with international standards. many take comfort that we have been in a position of strength as we traversed recent and ongoing global turbulence in financial markets. that may be so but we cannot be complacent : new challenges are before us and we need to address these now. indeed, there will be no shortage of issues to confront. financial markets are never static and we must be able to respond accordingly. from our perspective as industry regulator, two challenges deserve particular mention. financial stability as the prudential cornerstone with the global economic turmoil in the last five years far from over, the first challenge must be to maintain financial stability, which ladies and gentlemen, goes beyond the basel 3 agenda. new standards