- in capital ( php46 billion ). to top it all, our u / kbs appear to be purposely leaning on the side of caution. the account “ cash and due from banks ” has significantly increased. since end 2012, u / kbs have recorded an increase of php867 billion or a staggering annualized growth of 37 %. reforms : how strength can be further enhanced as these numbers validate, there is definitely every reason to believe that we are in a position of strength and finding ways to sustain it. this is a feather on our cap. but we also must be circumspect enough to accept that strength is neither absolute nor eternal. financial markets continuously evolve and the same position of strength can be a marked weakness at another time and under different market circumstances. this is why the bsp has made it clear that we support the principles underlying the espoused global reforms. we believe that there is reason to the global reforms. but we are open to both the timing and execution of the reform details. bank capital – the very core of banking supervision principles – must always have the capacity to absorb losses from risk taking behavior. these are no longer from your plainvanilla credit, market and operational risks. instead, we need to be more cognizant of such issues as liquidity pressures, excessive leverage, interconnectedness, and the bar of governance applicable to each entity with a public franchise to operate as a bank, including and especially for those which are deemed systemic by virtue of their operations, market reach and the unique products and services that they provide. these are all enshrined in the basel 3 reform agenda. and while we support the basic prudential intent of these reforms, we have also been very deliberate in our roll out of the reform components. within the asean - 5, we were the last to implement the capital reforms for basel 3. to - date, we have issued exposure drafts for the treatment of counterparty credit risk, domesticallyoperating systemically important banks, the data aspect of otc derivatives and of leverage. and while the exposure draft for liquidity risk has yet to be issued, this too has been simulated, much like our prior efforts on capital, d - sibs and leverage. apart from the global reforms, we have quite a bit in the pipeline for things that we consider home - grown issues. it is a long wish list, and i shall not go through each of them here. i am fully

efficient retail payment system. notwithstanding all of these developments, we recognize that the fintech narrative goes beyond just the bsp. in fact, more pioneering solutions are cutting across regimes of different regulators of the financial sector. this is why in the 3rd quarter of last year, the financial sector forum, composed of four financial regulators in the country, namely the securities and exchange commission ( sec ), the insurance commission ( ic ), the philippine deposit insurance corporation ( pdic ) and the bsp, formed a fintech committee aimed at harmonizing regulatory responses to fintech innovation in the financial sector. among the priority agenda that the fsf - fintech committee undertook was identifying the numerous fintech use cases and the scope of authorities of each regulators. through clear understanding and increased collaboration, financial regulators can quickly anticipate changes, assess technological trends across different sectors, and optimize the potential of digital innovations to provide more convenient, and efficient financial services. the cross - cutting nature of fintech developments has also magnified the importance of shifting to activity - based regulations. likewise, i am pleased to share that the fsf - fintech committee is in the initial stages of crafting a cooperative oversight framework which will institutionalize our collaboration and clarify regulations to all supervised and would be supervised entities. but again ladies and gentlemen, we are just one side of this financial equation and we need your support in striking the balance of ensuring that regulatory and supervisory frameworks are in tune with emerging trends and developments. we hope that you can actively help us shape this narrative into something that is desirable, safe, sustainable, inclusive and rewarding for all stakeholders, most especially the filipino people. 3 / 4 bis central bankers'speeches as we move forward in this collaboration, i hope that we all keep the benefit of the filipino people in mind. thank you for the opportunity and i am looking forward to engaging conversations with all of you. needless to say that the bsp, as your partner in promoting financial innovation and inclusion, will remain dedicated and committed in supporting beneficial fintech innovations through an enabling policy and regulatory environment. thank you and i wish everyone a fruitful conference. 4 / 4 bis central bankers'speeches