has been the subject of criticisms from the regulatory community. the bsp has taken bold steps on these issues. at the onset, we emphasized that all financial institutions under bsp supervision should comply with the provisions of the new standards in all respects in preparing their audited financial statements. however, we remained steadfast in our position that financial institutions should provide for both incurred and expected losses. in this regard, they have to comply and reflect the bsp recommended valuation reserves in the prudential reports or in the reports submitted to bsp. on the other hand, considering the amendments of the iasb on the fair value option provisions, we allowed financial institutions to use the said classification, subject to certain regulatory conditions such as : • having an appropriate risk management system prior to initial application of the fair value option for a particular activity or purpose and on an ongoing basis. • the fair value option may only be used for instruments for which fair values can be reliably estimated ; and • financial institutions should provide bsp with supplemental information as may be necessary, to enable bsp to assess the impact of the financial institution ’ s utilization of the fair value option. the adoption of the standards does not only call for alignment of existing regulations with the provisions but also necessitates the establishment of the infrastructure for prudential financial reporting. in this respect, we have revised the manual of accounts and developed a new reportorial requirement for banks. the advantage of going through this exercise is that we, as regulators, were given an opportunity to design the reportorial structure to create a common platform serving all our information requirements. the amount of information that we will be able to generate from the new reporting structure will enhance our off - site supervision capabilities. the philippine transition to ifrs is a consultative process involving the regulators, industry players and external auditors. the different perspectives shared in this endeavor helped us in understanding the principles behind the standards and the impact of adoption on our interrelated functions. disclosures and good governance one of the key features of the standards is the overwhelming amount of disclosure requirements. this has made financial reporting a complex process. however, looking at the upside of it, these disclosure requirements will empower the stakeholders in making relevant decisions. the bsp believes that this uncovering of more information, will help us realize our vision of full transparency, which is one of the pillars of good corporate governance. disclosures along with the other reforms that we have implemented such as requiring the

together is success. if everyone is moving forward together, then success takes care of itself. " congratulations to the financial sector forum member agencies for taking this step to improve 1 / 2 bis central bankers'speeches the supervision of financial conglomerates in the philippines for the benefit of the filipino people. thank you and good morning! 2 / 2 bis central bankers'speeches