properly communicated to our constituency, the filipino public, through such documents as the inflation report and regular press statements. we welcome your comments on the contents of the report and hope that you will continue to actively participate in the public dialogue on the monetary policy process. thank you and good morning.

category of good, sturdy but unspectacular. nothing wrong with that, of course. however, the most important work in the field of strengthening financial systems rests not with the myriad of international agencies listed above, but with the countries now vulnerable to financial crises. the hard effort will be in lifting management quality in banks in the developing and emerging economies, in improving risk recognition and risk management, in improving the regulatory regimes in those countries and improving the quality of regulators and supervisors. and the solution for weak banking systems is not government underwriting. it lies in building structures in which individual banks can be allowed to fail, and in which shareholders can be allowed to suffer losses, without putting in jeopardy the entire financial system of the countries concerned. to put some particular new zealand perspectives on these issues, i feel that strengthening the market disciplines on banks and other corporate entities is an important policy objective. governments cannot underwrite private entrepreneurial activity without encouraging over - investment and leaving themselves vulnerable to subsequent collapses. in the banking sector, the empirical evidence seems overwhelming that government - owned banks are likely to be weakest in risk management. ( depositors assume they cannot fail, because of government ownership. the managers, for that reason, are less likely to be sensitive to deteriorating asset quality ). and government - owned banks are most likely to be encouraged into dubious lending for reasons other than sound commercial judgement. moreover, you will not be surprised to hear a new zealander argue that real benefits can flow from a willingness to allow foreign ownership of banks. those benefits include access to skills and control systems that might not be available locally, the introduction of international business standards into local markets, and reduced vulnerability to inappropriate political influence. another important element is that the introduction of foreign capital constitutes a useful device for spreading risk in small and narrowly based economies. the consequences of unforeseen shocks are thus rendered less damaging. well capitalised and reputable foreign owned banks are less likely to fail and have the capacity to bear some of the consequences of a localised shock. if necessary, foreign owners can provide additional equity to support their local banking operation. capital account issues there has been a long - standing presumption within the western economic orthodoxy that the case for liberalising capital account transactions is essentially analogous to that for liberalising trade. that presumption has come under serious review and challenge subsequent to the asian meltdown of 1997 and 1998. recent debates at the board of the imf reflect that revisionism, with