amando m tetangco, jr : national strategy for financial inclusion – our platform to provide better lives speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launch of the national strategy for financial inclusion, manila, 1 july 2015. * * * welcome to the beginning of our collective journey to change filipino lives for the better through financial inclusion. in this journey, the national strategy for financial inclusion ( nsfi ) which we are launching today, shall serve as our road map. about the nsfi : overview for the philippine government, financial inclusion is an enduring vision – financial inclusion that supports inclusive growth, one that promotes shared economic development, upholds social cohesion and reduces income inequality. this is explicit in the philippine development plan. indeed, inclusive growth is the ultimate goal. this is the reason why many agencies are engaged in development activities. with the nsfi, we focus on achieving financial inclusion that promotes inclusive growth, consolidate our efforts to avoid overlaps, and together set priorities to maximize use of our resources. the nsfi covers three fundamental points : ( 1 ) why we are pursuing financial inclusion, ( 2 ) who we are targeting to include, and ( 3 ) what we should do to translate the vision into reality. let me expound on these more fully. why pursue financial inclusion we are pursuing financial inclusion because we want filipinos to have better lives – similar to those whose inspiring stories highlight our exhibit. indeed, with a small loan, or some savings, a microinsurance cover, steady remittance from abroad sent through formal channels and access to other financial services, more and more filipinos are lifting themselves and their families out of poverty toward higher incomes, riskprotected assets, and brighter futures. surveys indicate that roughly 25 percent of filipinos still live in poverty. one can say therefore, that we have millions of “ reasons ” to do our best in building an inclusive financial system. the timing is right. the philippines is in a bright spot, with gdp growth averaging 6. 6 percent in the last three years, one of the highest growths in asia and the world. this has been achieved in an environment of within - target inflation, a desirable combination indeed. at the same time, the philippine financial system is in a position of strength, with steady growth in resources, healthy balance sheets, and capitalization that is well -

, there are a variety of market participants that could better protect their own interests – and the financial system – if they spend more time understanding the key assumptions being made in financial modeling, and have a clearer understanding of what could happen if those assumptions were invalid. properly done, stress testing should provide valuable information to organizations on key risk drivers. this needs to be more than feeding a handful of macroeconomic assumptions into a model. it requires an understanding of the events that could lead to that macroeconomic outcome, and what other indirect effects might be likely to occur. who should be responsible for regular, thoughtful stress testing? risk managers, ceos, and boards of directors should all understand key risk drivers – and should consider whether a stress scenario is sufficiently severe, and whether the direct and indirect effects are reasonably captured. rating agencies and stock analysts should be increasingly demanding better quality stress tests, and that the results be made available to them. finally, regulators should be able to compare and contrast the quality of stress tests across organizations and hold accountable those organizations that are not keeping up with their peers. as i mentioned at the outset, challenging assumptions and understanding risks should not only be the responsibility of the risk manager. these things also need to be better ingrained in ceos, members of boards of directors, and regulators. operationalizing this point is not going to be easy, but it is critical. at a fundamental level, debunking a myth requires individuals to go against strongly and widely held beliefs, to convince decision - makers, and to build consensus. for this to happen we may need significant changes in the governance of risk management at banks and other parties in the financial system. put more plainly, we need to think about an environment where those in the position of most influence have the incentive to “ poke holes ” in myths via robust stress tests, and not the incentives to override their risk managers when the stress - test implications are not to their liking, or risk a near - term loss of clients or market share. concluding observations new financial myths are regularly created. in closing, i will just speculate on where some may exist that interested parties should be exploring, now. potential myth 1 – sovereign debt problems will not be disruptive to the world economy. not long ago, the sovereign debt problems were viewed as manageable and confined to one country. however, as interest rate spreads have widened – as shown in figure 12 – investors are highlighting that problems in many countries bis central bankers ’ speeches have