numbers : 600 and 31. the latest figures suggest that the world generally saves at a rate of roughly 20 % of gdp. asean, however, has a gross domestic saving rate of 31 %. applying these figures to the usd2. 395 trillion gdp of asean in 2013, we have asean saving at usd742. 5 billion of which usd263. 5 billion ( i. e., 11 % of gdp ) can be seen as a saving that is higher than the norm for the rest of the world. these are not small numbers, a good portion of which is invested outside of asean. when combined with the estimated asean population of over 600 million individuals, a more organized asean financial market does seem to make its own case. preparing for new foreign interests and added competition this brings me back to the first question : how do we prepare for the new foreign interests coming into our banking industry? perhaps, with one eye equally focused on trying to mobilize a portion of the usd742. 5 billion in asean saving in 2013 alone? unfortunately, there is no switch that we can conveniently toggle between “ on ” and “ off ” for this. the best preparation is simply to have each bank operate with due recognition of the impact of financial risks on its own balance sheet and that of the system as a whole. this combines 1 ) the effective management of risk exposures and the enforcement of a binding governance culture at the bank level and 2 ) the regulatory oversight and mitigation of systemic pressures that may be developing. this is the specific context of what we euphemistically refer to as an “ enabled environment ”. it is simply a regulatory framework that deliberately nurtures the creativity of providers to deliver innovative product and services while giving regulators enough leeway to intervene to address conflicts of interests, including the possibility that what may be good for individual banks may not necessarily be beneficial to the system at large. in the capital market, we need to strengthen and finalize our pricing conventions so that there are no material gaps between reference rates and market valuation. we strongly subscribe bis central bankers ’ speeches to price discovery and we aspire to implement the principles on financial benchmarks soonest. market infrastructure, of course, plays a central role for the efficient transfer of funds and settlement of obligations, whether onshore or offshore. the bsp is playing a very prominent role in regional and global discussions to calibrate the global otc derivatives infrastructure requirements to better reflect the less active

responsive and responsible agents, it is incumbent upon us to adopt and adapt. we adopt the higher norms prescribed for good governance, risk management, market conduct and consumer protection since these define our new market architecture. however, we are equally practical and pragmatic in recognizing idiosyncratic conditions that require us to adapt the global standards in ways that better serve our prudential purposes. moving on to the second issue. we are seeing regional financial integration materialize into a defined reality. what was perhaps a faint prospect at an earlier time and was hardly discussed publicly, we now hear of promises of improved well - being for financial consumers and prospects of larger markets for service providers under the certainty of enhanced competition. the integration timelines have been set and how we handle ourselves against those milestone dates will greatly determine the macro - financial landscape for generations to come. in banking, we have a few short years before qualified asean banks ( qabs ) may enter our market. the integration of asean insurance markets has a more assertive timeline bis central bankers ’ speeches while capital market development has a definitive vision for a harmonized framework for cross - border securities transactions. none of these integrated markets could exist, however, without the necessary pipelines and so interoperable and / or interlinked trading, clearing and settlement systems are likewise a necessity. as you can see, ladies and gentlemen, there is much that lies ahead of us. the new normal has set the bar higher in the manner regulators supervise the financial market and how market participants conduct themselves. against the certainty of change, are we ready? thankfully, the philippine financial system has the advantage of being in a position of strength. but, we have repeatedly argued that this strength is neither permanent nor absolute. change is a certainty because the needs of financial consumers evolve with time. markets, in turn, offer a richer menu of products and services that address the evolving broader needs of financial consumers. and on top of these, we have seen in recent times that markets sometimes need a fresh - but - major reboot and that too will certainly call for change. these changes are most apparent in the recent legislative and policy initiatives to further open our banking market to foreign interests. i am often asked whether the philippines is ready for banking integration. although it is not as often raised, the accompanying question is why we should be part of such integration efforts. let me address the latter question first as a prelude to the former. the answer really may just boil down to two