it seems obvious that there is no universal standard – or “ magic number ” that is out there. what is clear though is that as you make your decisions on what you deem is the right size for you, you must continue to be guided by the bsp ’ s regulations on the appropriate governance structures and risk management frameworks. in the process of determining the scale and scope of your operations, it is my hope that you will be able to deliver the needed financial services to your clients at reasonable terms – just as it has been envisioned in the rural banks act. what the future brings rural banks must remember that you are yourselves stakeholders in the community. you are, in effect, a financial consumer – as an institution and as individuals – in the community that your bank also operates as a financial provider. as i close, i want to inform you that the bsp has spearheaded the formulation of a national strategy for financial inclusion, the national strategy for financial inclusion ( nsfi ). we are set to launch this in july this year. it ’ s a multi - sectoral endeavor that sets out the coherent framework on how all our efforts, those of the public sector and the private sector, can be closely and systematically coordinated to bring about financial inclusion that leads to broadbased and inclusive growth. rural banks are an integral part of that strategy. it is a great opportunity. i urge you to closely engage with us on this grand endeavor. friends, change is everywhere and perhaps none more so than in the present times. you talk of a “ new vision ” because we need to accept that there is a new normal in banking. it is still very much a business activity but one which is held to a very high social standard. this important qualification is necessary to protect the financial consumer from conflicts of interest, to instill corporate governance standards, to enforce global best practices for managing risks and ultimately, to sustain public trust. we have seen during the global crisis what a banking market becomes in jurisdictions where public trust becomes eroded. it would be an over - simplification to argue that their problems are unique and could not arise in asia or in the philippines. these problems have not manifested themselves here because we took early steps to prevent the build - up in risk and we continue to invest in a regulatory environment that nurtures your creativity as product providers while mitigating the ill effects of unwarranted risks. there is a need for “ one direction ” to strengthen commonality in purpose in addressing

international agreement known as basel iii, which establishes minimum standards for internationally active banks around the world ; the united states, however, has gone even further to raise capital requirements for the largest firms. third, large firms are now required to show that they can continue to operate safely and serve their customers in stressful conditions similar to those that occurred during the crisis, an exercise known as stress testing. fourth, under the dodd - frank wall street reform and consumer protection act ( dodd - frank act ), congress authorized a new regime, known as “ resolution, ” to manage the failure of large firms in an orderly manner and reduce the chances that such a failure would threaten financial stability. the congress empowered the fed and the federal deposit insurance corporation ( fdic ) to require large firms to develop resolution plans. the fifth and final regulatory change i want to mention is that the dodd - frank act also gave the federal reserve more explicit responsibilities for safeguarding financial stability. as applied to large institutions, more stringent capital requirements and the other regulatory changes i have just described are intended to promote the stability of the financial system. in addition, to address the fragmentation of responsibility for financial stability across different agencies, the fed is part of a new interagency body, the financial stability oversight council, which helps u. s. regulators work together more effectively to better promote the stability of the financial system. enhanced supervision along with the additional tools provided by these regulatory changes, the federal reserve has fortified its supervision of large financial institutions. we significantly enhanced the manner by which we assess whether these firms have sufficient capital and liquidity and are meeting new regulatory requirements in this area. we have substantially raised our expectations for how well the firms we supervise should be managing their risks, maintaining internal controls, and exercising governance. and we have reorganized our supervision of large financial institutions to increase the quality, consistency, and range of perspectives brought to bear on supervisory strategy and decisionmaking. one of the most important enhancements to large bank supervision since the financial crisis is our assessment of whether large institutions are holding enough capital to deal with stressful financial conditions. the program includes stress testing and a yearly review of how firms are planning their future capital needs. 7 the latest results will be disclosed in the coming days. capital stress testing for banks is not new but the federal reserve has employed it much more extensively since the crisis. 8 using information on a bank ’ s finances and operations, these tests gauge how a firm ’ s capital position would be affected by