intent of the bsp ’ s policy thrust. a strong positive consonance between the two will certainly make our monetary and banking policies even more effective. in the end, our hope is that the resulting market conditions would create wealth and prosperity not only for you, as intermediaries, but also for the filipino people, who are, after all, the bsp ’ s and your ultimate stakeholder. fact 1 : we have buffers against known vulnerabilities. first, our strong macrofundamentals yield solid growth and low inflation. gdp growth ( left slide ) bis central bankers ’ speeches • gdp grew robustly by 7. 5 percent in q2 2013, supported by strong household and government spending, as well as increased investments in capital formation on the expenditure side. these drivers of growth offset the negative contribution from exports. on the production side, gdp growth was led by the services sector. • 4th consecutive quarter of above 7 pct growth, 58th consecutive quarter of positive growth. inflation ( right slide ) • inflation pressures remain manageable. headline inflation expected to fall within the 4. 0 percent + 1. 0 percentage point target range for 2013 – 2014 and the 3. 0 percent + 1. 0 percentage point target range for 2015. second, we have a comfortable cushion of fx reserves which buffers the country against external shocks • • the country ’ s gir stood at us $ 83. 2 billion as of end - august 2013. – adequate to cover 12 months ’ worth of imports of goods and payments of services and income ; – equivalent to 8. 0 times the country ’ s short - term external debt based on original maturity ; – 5. 5 times based on residual maturity. comfortable margins from historical and international standards. third, the bsp ’ s consultative style and clear effort to understand market behavior have helped us calibrate regulation appropriately. the graphs prove that this proactive approach to oversight of the banking sector contributes to healthy asset quality and credit growth. kb lending ( left slide ) • the philippine banking system has been exhibiting strong lending growth since 2011. as of july 2013, bank lending growth stood at 12. 3 percent. • growth in bank lending has been fueled by both supply and demand factors : – supply side : encouraged by steady growth in domestic liquidity and improved asset quality – demand side : explained by increased financing needs of businesses and households, plus relatively low interest rates attractive terms of financing offered by banks gnpl ratio ( right

fundamental vectors of action since the beginning, which are mirrored in the themes of this conference ’ s panels : ( i ) firstly, banco de portugal ’ s strategy is based on the development of a regulatory framework that covers and regulates the conditions to market the products and services of retail banks ; ( ii ) secondly, banco de portugal is responsible for compliance with the regulatory framework applicable to the relationships between credit institutions and their customers through effective oversight and sanctions procedures ; ( iii ) and finally, but no less important, we have, since the beginning, worked hard to inform and educate banking customers. examples of this are the bank customer website, launched in 2008 and completely renewed in 2017, and the national plan for financial education, promoted with the other financial sector supervisors and which is supported by a large network of partners. 2 / 3 bis central bankers'speeches digital challenges i will end my address, as i couldn ’ t refrain from doing, with a reference to the challenges the conduct supervisor faces due to the progressive digitalisation of the channels used in the sale of financial products and services. the digital environment encourages the emergence of innovative products and services and new suppliers, with business models that are sometimes disruptive in comparison to traditional banking. furthermore, the dematerialisation associated with using digital channels facilitates the sale of products and the provision of cross - border banking services. regulators and conduct supervisors must therefore take on an active role in the digital ecosystem, catalysing the benefits and safeguarding against risks that may emerge. regulation and supervision should not impede innovation but they should ensure that the bank customer is protected, regardless of the channel used to carry out banking transactions. the conduct supervisor must therefore : closely accompany the technological innovation process in the retail banking markets ; reflect on the suitability of the existing regulatory framework ; develop new oversight tools and surveillance strategies to ensure that the regulatory framework is suitably complied with, that conditions for all operators are equitable and that banking customers are protected. promoting the financial literacy of bank customers is also of particular importance. that is why the development of digital financial information and education initiatives is one of our top priorities. so i invite you to get to know the campaign recently launched by banco de portugal on social networks and on the bank customer website to promote the security of young people who use digital channels. thank you all and i hope that this conference is beneficial to all those present. 3 / 3 bis central bankers'speeches