the impact of el nino mainly through drought - resistant seeds. so, we are hoping that will work. 1 / 7 bis - central bankers'speeches that is what is going on in the inflation front. our number one mandate is to stabilize prices, keeping inflation within the target range of two to four percent. the good news is that our banks are doing well. suppose you look at the regulatory numbers. our what we call the capital adequacy ratio is at 16. 4 percent. the regulatory standard or the regulatory floor is 10 percent. so, we are well above the regulatory floor regarding capital. when it comes to liquidity, 183 percent. the liquidity we are measuring here is the lcr or the liquidity coverage ratio. the regulatory standard is 100 percent. loans have been growing briskly, 9. 8 percent, and the npl [ non - performing loans ] is manageable at 3. 2 percent. so, the banks are okay. so, the banks should be able to finance growth. so, that is where we stand. let me now go on to talk about what challenges we face. conducting monetary policy in a supply - shock economy we are facing the challenge of monetary policy in what has become a supply - shock economy. our economy has been subject to more supply shocks than in the past, which is very unusual. we also aspire to help digitalize the banking and payment system. we will talk about that in a little bit. we also aspire to help deepen the capital markets with your help. so, i hope to discuss some issues related to deepening the capital market. let me say about how we are doing monetary policy these days. as you know, we got hit by oil price shocks, food price shocks, and fertilizer price shocks. globally, inflation peaked in 2022. our inflation rate peaked in january 2023 at 8. 7 percent - the highest in 14 years. as i have said, we are down to 3. 4 percent, partly because of the monetary policy. the difference between the economy we now have and the economy we used to have is the dominance of supply shocks hitting us. what happens, i think, in our analysis of the supply shocks is that supply shocks lead to inflation expectations. the oil price goes up, people think other prices will also go up because oil, of course, is an input to the production of many things, and so prices go up for those other things. we

the p1000 earns a little bit of interest, you recover the p6. that's called positive seigniorage. on the other hand, the coins have a small face value, yet the cost of production is so high. so you're helping us solve this problem. but you're also helping the public because there's a sense of fairness. ayaw ng mga tao ng sukli ay kendi. this is solving problems for everyone. the only question i want to ask myself is, with something as good as this, why did it just come only now? the question is why and the reason is somebody has to think of it. and thank god, enough people thought about it, and now people came together and talked about it, and here we have it! we in the bsp think that [ with ] our investment in the machines plus the creativity of our partners, everyone will benefit. in other words, partial ideas put together can become full - blown ideas that work. 1 / 2 bis - central bankers'speeches i'm very, very optimistic that after a two - year pilot run, we will be able to deploy these machines, and hopefully, i'm quite confident that the benefits will be realized. the lesson from this is : what other things here in bsp could follow this model? and i'm thinking, what about the fact that we are so " dependent " on the p1000 bill because the atm is the best way to distribute currency? banks don't like to put p100 bills in atms because it's very expensive, right? such that the p100 bill tends to just keep circulating [ in the informal economy ] even if it's no longer fit. so, another version of this [ model ] : maybe we will have fitter notes that would use the very principle we used here [ in the coin deposit project ] and find the very same partners we have here. when we think this way and work together this way, we, together, can do a lot of things. thank you very much, and good afternoon. 2 / 2 bis - central bankers'speeches