at the developments in overseas economies by region, the u. s. economy has continued to recover, underpinned by household spending. in the january - march quarter of 2015, economic growth decelerated significantly due to transitory factors such as the effects of the severe winter weather and the strikes at west coast ports, but a clear rebound was observed in the april - june quarter, with high growth. against the backdrop of the continued favorable employment and income situation, the growth momentum seems to be solid. the federal reserve ’ s tightening coming into sight also suggests improvement of the u. s. economy. the european economy saw continued growth of nine consecutive quarters and has continued to recover moderately. as the financial assistance to greece is being implemented, global financial markets ’ view on the situation has become positive. going forward, as the effects of the depreciation of the euro and monetary easing permeate, the european economy will likely continue to recover moderately. while the advanced economies are growing steadily, the emerging economies are slowing. first, as for china, the recent substantial decline in stock prices has had a significant impact on global financial markets. this could be regarded as a correction of the excessive level in stock prices that had more than doubled during about the half - year prior to the decline. nevertheless, the real economy has also seen somewhat of a slowdown recently. with the increase in income levels, the chinese economy is experiencing a phase of a shift in its economic structure from one centered on manufacturers to one centered on the services sector, leading to a change from high growth to medium growth. the recent slowdown is considered to be the adjustments of excess investment in manufacturers in this phase. the fact that investment in regional economies has been weak as political, economic, and social structural reform is carried out seems to be another reason for the slowdown. under this situation, the chinese authorities have been providing a series of economic stimulus measures both on the fiscal and monetary fronts. with relatively large room for conducting policy measures both on the fiscal and monetary fronts, the chinese economy is likely to follow a generally stable growth path, albeit at a somewhat reduced pace. emerging economies other than china are also showing sluggishness, reflecting the spillover effects of adjustments in china and global weakness in it - related demand. this sluggishness is likely to continue for some time, but as the positive effects of the growth in advanced economies spread, economic growth in those emerging economies is expected to gradually accelerate, with domestic

sustainable financing. more respondent banks view such mode of financing as highly important. finally, banks intend to maintain capital and liquidity buffers at levels higher than domestic and global standards to promote institutional stability. the bsp will continue to push for major reforms to ensure the soundness, stability, resilience and inclusivity of the banking system amid the ongoing health crisis. the bsp ’ s strategic regulatory and supervisory thrusts focus on three key areas, namely : strengthening risk governance ; ( 2 ) promoting responsible and responsive innovation ; and advancing the sustainability agenda in the financial system. the pandemic triggered a strategic review of business models and business priorities due to the changing business landscape. this highlights the importance of having strong risk governance. the bsp will continue to raise the bar in managing risk to ensure that the financial industry remains resilient to threats to financial stability. in this respect, we expect three things from banks : 1. we expect banks to build buffers and adopt robust stress testing methodologies so that they will be able to timely identify emerging risks, anticipate the occurrence of new risk triggers and prepare for their occurrence. 2. we expect banks to adopt more resilient systems to fend off the increase in cyber threat actors as the industry becomes largely digitalized. 3. finally, we also expect banks to continuously adhere to the tenets of good governance and protect the interest of the public even with the reduced face to face interaction with their clients. recent issuances of the bangko sentral are all directed toward this end. for instance, the bsp recognizes that building and sustaining a good reputation is a critical element in promoting a bank ’ s safety and soundness. since reputational risk is inextricably linked to other risk exposures such as credit, market, liquidity, and operational risks, it can be triggered by any risk such as for instance an unfavorable feedback from a client. circular no. 1114 or the guidelines on reputational risk management recognizes that everyone in the organization has a role to play in the management of reputational risk. said guidelines highlight the importance of shared accountability and has set out the roles and responsibilities of the board of directors and officers, consistent with the principle that the tone of good governance should come from the top. in the same vein, the bsp issued circular no. 1112 requiring banks to observe due diligence in the recruitment of their personnel. the “ know your employee ” rule