amando m tetangco, jr : focus on the central bank of the philippines ’ core mandate of promoting price and financial stability opening statement by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the foreign correspondents association of the philippines ( focap ) forum, manila, 4 december 2006. * * * i am pleased to address you in this forum organized by the foreign correspondents association of the philippines. your continued interest in the philippine economy has greatly helped in shaping the quality of information provided to the international community. fora such as this offers us an excellent opportunity to engage various stakeholders in policy dialogue. my short remarks today will focus on the bsp ’ s core mandate of promoting price stability and financial stability and how the institution has responded to the challenges facing it. as fed chairman bernanke aptly puts it “ monetary policy is most effective when it is coherent, consistent, and predictable, while at all times leaving full scope for flexibility and the use of judgment as conditions may require ”. this highlights the fundamental role of transparency and communication in inflation targeting. the more that the public understands the logic of our policy framework and decisions, the more we are able to better manage inflation expectations and the more their behavior will facilitate the achievement of the price stability objective. an encouraging development is that inflation has been on a decelerating trend beginning the second quarter of this year, much earlier than expected. what is bsp ’ s view on the inflation outlook? in our third quarter inflation report, released in october, we noted that our short run prognosis points to subdued supply pressures and uneven demand conditions. subsequently, on november 2, the monetary board decided to maintain the bsp ’ s key policy rates. at the same time, the tiering scheme on banks ’ placements with the bsp under the rp / rrp and special deposits accounts windows was restored. this measure is intended to encourage banks to seek alternatives to placing their excess funds with the bsp such as lending to the public. looking ahead, the bsp is fully aware that it still has to contend with the obvious danger to inflation posed by oil prices and the potential surge in liquidity growth from strong foreign exchange inflows. as risks to inflation are judged to remain tilted on the upside, the bsp will continue to keep a close watch on incipient inflationary pressures, especially those emana

amando m tetangco, jr : strengthening partnerships for a more resilient banking system remarks by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the thanksgiving dinner hosted by the aig philam savings bank, inc., makati city, 23 november 2006. * * * thank you ched. former central bank governor and now philamlife president and ceo jose cuisia, jr., mr. ridha wirakusumah of aig asia, other officers and staff of the philamlife - aig family, fellow bankers, special guests. good evening! i am glad i am here to witness what you call the gala premier to celebrate the merger of philam savings bank and aig credit card company philippines which gives birth to aig philam savings bank. to us in the banking sector, this strategic move by the philamlife group and aig to consolidate their consumer finance businesses will further strengthen the bank ’ s financial position and boost its competitive edge. ultimately, this should translate to a more efficient and reliable delivery of financial products and services to the public. to central bankers like me who are responsible for keeping the banking sector sound, healthy, and responsive to the needs of the economy, this is welcome news indeed. my former boss, former central bank governor joey cuisia, will attest to this. in fact, it has been the policy of the bangko sentral ng pilipinas to encourage mergers and consolidation …. so that we will have stronger and more globally competitive banks. thus, those keeping track of developments in the banking community will realize that the aig philam savings bank is the latest outcome in a series of mergers that have been taking place as our banks gear up for increasing competition. in this period of global convergence where competition is the norm and banks are measured against rigorous standards, one strategy that enhances the likelihood of survival and sustained viability is to go the way of mergers and consolidation. in this regard, we foresee a scenario of fewer but more financially powerful universal and commercial banks that are better able to compete in a world of more open borders. however, this is not to say that there will be no place in the evolving financial environment for smaller banks such as thrift and rural banks. in fact, smaller specialist banks cover important niche markets that have unique needs ; for instance, consumer trade and