manageable levels helped to create a calmer environment that sustained domestic business. third, because we kept to our policy of a market - determined exchange rate, the peso broadly maintained its competitiveness against a basket of currencies of our major trading partners and competitor countries although it lost much of the gains of 2007 as the country wasn ’ t spared from the heightened risk aversion towards emerging markets, the peso ’ s fall was nevertheless in line with the movement of other currencies in the region, which also fell against the us dollar. fourth, with an appropriate fx regulatory environment and a natural pool of talent, we were able to attract fx investments particularly in the bpo sector. remittances also kept flowing. these allowed us to continue to build our gross international reserves to comfortable levels, above international benchmark levels, and therewith continue to register a surplus in the bop. fifth, the banking reforms we had put in place during earlier years have caused the banking system to be only minimally exposed to the troubled global financial institutions and thus remain sound. in addition, the inherent conservatism and the domestic orientation of banks, as well as the bsp ’ s phased - in approach to embracing financial innovation helped to keep our exposure to the global financial turmoil limited. our banks continue to be capitalized above the bis standard and bsp regulatory requirement ; bank balance sheets are at their strongest since the 1997 asian financial crisis ; and assets continue to grow. sixth, through the series of reforms instituted, our monetary and regulatory frameworks have become more flexible. these now allow us to quickly respond to changes in our working environment. for instance, at the time when there was perceived tightness in liquidity and some friction in distribution of both peso and dollar funds at the height of the uncertainty from the global financial turmoil, the bsp was able to expeditiously adopt measures to address these market concerns. among the measures put in place to address peso and dollar liquidity were a ) the relaxation of valuation and collateral requirements for the existing peso repurchase facility, b ) the creation of a new dollar repurchase facility and c ) the doubling of the budget for e - rediscounting. in the meantime, to address distribution issues, the bsp a ) reduced reserve requirements on bank deposits by 2 percentage points and b ) maintained a presence in spot and swap fx markets. in addition, to address temporary concerns due to the difficulty in

amando m tetangco, jr : capacity - building and the bangko sentral ng pilipinas ’ reform agenda speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the induction ceremonies of baiphil ’ s 2012 – 2013 officers, makati city, 11 july 2012. * * * to the incoming and outgoing officers of baiphil, led by mr. buddy serrano and ms. agnes brillantes - santos, members of the organization, mb members ignacio bunye and armando suratos, sec chair tess herbosa, pdic president val araneta, fellow bankers led by bap president abet villarosa, distinguished guests, my colleagues at the bsp, ladies and gentlemen, good afternoon. it is a pleasure to join you today to induct your incoming officers. of all the organizational activities, the passing of the baton is truly meaningful. similar to the relay races in athletic competition, moving the baton typifies continuity as the next leg takes over from the last one. on this basis, i would like to laud the outgoing officers for completing yet another successful, activity - laden chapter in the story of baiphil. i also congratulate your incoming officials for accepting the challenge of leadership and for taking their turn in carrying the baton. reaping the fruits of investing in ourselves managing change is certainly not alien to any of us here. from the persistent difficulties we endured in the past through one financial crisis after another, we now find ourselves in a position of strength. for some time, we referred to this as a mark of our resilience. perhaps, it may be more appropriate to simply describe it as “ investing in ourselves ” but with a clear view of the changes that we would like to effect. the net result is open for everyone to see. with total assets of php 2. 95 trillion in 1999, the philippine banking system has grown to php 7. 33 trillion as of the end of 2011. this expansion has of course been accompanied by a corresponding increase in both deposits and loan levels. however, what is striking is not just the increase. rather, it is that we have been actually growing faster in this time of global difficulties than in the years of relative global calm. deposit balances have grown by 13. 40 % per year between 2007 and 2011 even though it is only growing by roughly