agencies that are more specifically geared for stimulating and maintaining growth. what we have done so far is endeavour to make credit and funding accessible at reasonable prices, commensurate to the risks agents are willing to take. for the needs of main street, we are in partnership with other government agencies on the capital market agenda. on servicing the unbanked and marginalized, the bsp has 1 ) put together a regulatory environment that has encouraged banks to design suitable financial products, and 2 ) expanded our financial education and enhance consumer protection efforts. innovation, competition, growth – role for finex? putting all three big words together – innovation, competition, growth – there is clear recognition that the government agencies cannot possibly handle the tasks alone. we need the private sector to be our active partner. here is where finex can play a major role. i mentioned at the onset that you are unique in your representation. as such, finex should be called upon to drive growth and competitiveness by pushing innovations that go beyond the bottom line, that consider the bigger picture, that contribute to financial stability. there are many ways by which you can pursue this in your own work. • you can avoid the temptation of leveraging finance through carry trades. the pay - offs may look enticing but compounded risk exposures are created in the process which often cannot be unwound without significant loss. bis central bankers ’ speeches • credit underwriting standards need to be kept high. this ensures that credit is allocated based solely on the merits of the prospective economic activity and the counterparty ’ s ability to pay. • binding market conventions and redress mechanisms should be pursued. such conventions set the bar on market conduct which then translate to uniformity in behaviour and practice. other avenues may be considered. when your individual creativities are pooled together under the finex umbrella, the opportunities are limitless. final thoughts i have covered quite a bit of ground this morning. but much of the breadth has been dictated by the call of the times. ladies and gentlemen, the best financial investments today are those that build bigger markets in the future. markets wherein stakeholders are better aware of financial opportunities. markets that are best able to withstand the build - up of system - wide risks. this, in my view, is the unique opportunity that is presented to a unique organization of financial executives. will finex rise to this challenge? thank you and good morning to all of you. bis central bankers ’ speeches

monetary policy formulation and implementation. to address this, the bsp has had to use a menu of policy actions. we have not limited ourselves to the policy rate. but we have used an enhanced policy tool kit. the kit includes allowing some exchange rate appreciation to account for the structural inflows and macroprudential regulations such as the increased risk weight on ndf transactions. the toolkit also includes a careful build - up of our reserves. reserves are for insurance. but it is not easy to determine an “ optimal level ” as some have suggested. the risks we are now insuring against are also evolving. that said, our experience in the recent crisis and its aftermath has taught us that it is critical to use the right tools for the job. competitiveness is more than the price moving to the second big term in your theme – competitiveness. the bsp ’ s contribution to competitiveness is maintaining a stable macroeconomic environment and banking regulatory framework. within these, the market can plan well ahead, consider expansion, innovate and find market - based solutions to address risks. the bsp ’ s primary mandate is price stability. it ’ s noteworthy that since 2009, the bsp has been successful at keeping inflation well - within the government ’ s official target range. and it appears that we would be able to do the same in 2012 and 2013. our forecast for inflation is that over the policy horizon, inflation should be manageable. therefore our current policy stance remains appropriate. in other words, you can expect interest rates to remain low over this period. but we will make adjustments should circumstances warrant, including, among others, in the event tensions in the middle east escalate and more weather - related supply chain disruptions occur. on the external front, the country ’ s external position is likely to remain robust, which in turn should fundamentally support the peso. our experience has taught us that allowing the market room to determine the exchange rate is equitable and efficient. so far, ( looking at the reer ), the peso has maintained its competitiveness and volatility has just been in line with the region. ladies and gentlemen, the bsp fully appreciates that when finance executives consider the macroeconomic operating environment, your ultimate unit of analysis is the corporate bottom line. you consider every transaction and how it would increase the value of the firm. this is well and good. but the complication arises when these individual “ animal spirits ” do not behave