framework to increase significantly overall capital requirements. 17 closing the gap taking all this together, there is clearly at present a wide gap between banks ’ disappointing returns on the one side and investors ’ expectations on the other. this is reflected in current price to book ratios. this gap may need to be closed from both directions. it is, however, clearly not the case that all banking is unprofitable or un - investable. the health of uk retail banking is almost certainly being masked by conduct costs, current and expected, and by outdated and costly business models that need restructuring, especially in relation to investment banking. but the returns expected by investors in banks may well be sticky and have further to fall to come into line with risk. the authorities may be able to assist this by giving greater clarity on the end point of the regulatory structure. this figure excludes rbs which is majority - owned by the uk government. see baker and wurgler ( 2013 ). see bank of england ( 2015 ). see bis ( 2016 ). bis central bankers ’ speeches on this last point, the stickiness in investors ’ required returns may be part of a more general adjustment to a lower interest rate environment. we are unable to measure them directly, but there is some evidence that despite the very low market rates we are now seeing across the yield curve, hurdle rates for corporate investment – namely, the rate of return required by corporates on new investment – have not reflected lower risk - free rates but rather have been sticky and remained near pre - crisis levels. the bank is doing more work on this. a recent bank of england discussion paper looking at measures of finance for productive investment cites data on hurdle rates as a material data gap in assessing the availability of finance for productive investment. 18 the bank plans to use its agency network to run a survey of hurdle rates later this year. conclusion what would alastair have made of the issues i have raised today? he knew well the risks that property markets can pose to stability. i hope he would be reassured by the creation in the uk of the financial policy committee within the bank of england which is now specifically charged with managing these systemic risks. the committee is monitoring property markets closely. it has already taken action and would not hesitate to do so again if it is needed to protect financial stability. alastair was also a champion of investor activism. i think investors have a role to play in restoring the economic profitability of banks, both by encouraging business model

this success. sure, it was not a perfect year, but it was successful, nevertheless, based on our key metrics. we focused on our priorities, worked long hours, and remained united as a team. we did not drop the ball, so to speak. and so, fellow central bankers, let us celebrate the success of team bsp in 2009 with a well - earned long round of applause. but beyond traditional central banking functions, team bsp also made remarkable accomplishments. let me cite a few : the bsp in cooperation with local banks successfully worked on further reductions in bank remittance charges for overseas filipinos and their dependents ; the bsp ’ s pioneering regulations for mobile money transfers have gained international recognition for its potential to reach out to the unbanked and become a useful and efficient channel for inclusive banking ; the bsp ’ s regulatory environment for the microfinance sector has been recognized as the best in the world ; the bsp ’ s credit surety fund program enhanced access of micro, small, and medium enterprises to collateral - free loans ; our continuing and full commitment to global standards under various certification programs ; the bsp ’ s legal breakthroughs in its fight against erring banks and bankers which gained support from the department of justice and the supreme court ; and the bsp ’ s consumer protection and financial education program continues to broaden and deepen its reach, attracting global recognition in the process. ladies and gentlemen, we have been able to carry out all these and more, because we have world - class central bankers and various human resource development programs that continue to enhance the capabilities and expertise of more bspers. we have also streamlined our organization, improved our work processes, re - engineered our planning and budgeting processes, and adopted a bsp citizens charter and a code of ethics for bsp personnel. what makes me even prouder is that bspers are not only excellent central bankers, you are also socially responsible filipinos. for instance, in the wake of the destruction wrought by “ ondoy ” and “ pepeng, ” bspers immediately went into action to share their time and resources to prepare and bring relief to thousands of displaced families. bspers also chose to cancel the annual bank - wide christmas celebration to donate its budget to filipinos who are in need. this is, indeed, a little sacrifice for a big cause. ladies and gentlemen. this is what i call sama - samang pagpu - punyagi