depositing and withdrawing money, sending and receiving remittances, purchasing and selling goods and services and making bills payments. the mabs - globe telecom proposal was one of nine selected from more than 70 projects submitted from 38 countries. nevertheless, even as the bangko sentral is responsive to these new developments and technological innovations, it continues to ensure that attendant risks are properly managed. thus, the bangko sentral has set in place the necessary regulations and procedures that cover electronic banking risk management, security procedures, internal controls, anti money laundering regulations, know your client requirements, as well as consumer protection. we have even created, within our supervision and examination sector, a core information technology supervisory group ( citsg ) to keep abreast with the latest developments in electronic banking. in parallel with the bsp ’ s liberalized branching regime, these technological innovations should enable banks to widen and deepen its reach to unserved and underserved bank clients in both rural areas and urban centers. there are other products using microfinance methodologies and technologies that are gaining interest. in our case, we at the bangko sentral ng pilipinas are reviewing the provision of housing microfinance, which can boost the financing needs of the low cost housing sector. finally, we recognize the increasing participation of large commercial players in the microfinance industry. we are seeing commercial banks and social investors providing loans, equity or assistance to retail microfinance institutions. these new linkages and partnerships should lead to a wider range of products, broader distributions systems, development of local currency capability and ability to hedge foreign currency by mfis, local capital market development for microfinance, and finally put microfinance in the economic mainstream. at the bsp, we are looking at various ways through which these partnerships can be fortified. we have conducted networking meetings between commercial banks and retail institutions ; we have also responded positively to requests from various interested parties to learn more about the intricacies of microfinance operations. and late last month, we issued circular 570 which recognizes microfinance loans of commercial banks to non - bank microfinance institutions as alternative compliance to the mandatory credit allocation of 6 % to small enterprises. this is an important incentive for banks to provide more wholesale loans that will increase the microfinance operations of retail institutions. indeed, exciting developments are happening in the microfinance sector. i am pleased to note in particular that mabs banks have kept in step

different matter. much attention has been devoted to the exercise within the industry and among bank supervisors, but no solution is at hand. best practice banks and early research at the federal reserve suggest that significant strides are being made in credit risk management, but the industry and regulators still have a long way to go. it is — and should be — the highest priority for the industry and the supervisors. last year, as you may recall, the united states and the other countries represented on the basel supervisors committee adopted new capital requirements for trading activities that are based on a bank ’ s internal measure of “ value at risk. ” that regulatory amendment represented an important shift in regulatory thinking and a greater willingness by the regulatory community to build on risk management practices of banks. with market risk, though, the basic elements of the “ value - at - risk ” measure were relatively well established, although most institutions still needed to strengthen certain aspects of their calculations and management processes. in that exercise, the necessary data for identifying current trading positions and measuring the historical volatility of their market values were also generally available. the mark - to - market process and short horizon of daily trading also helped greatly in evaluating the effectiveness and overall “ accuracy ” of the market risk models. none of these crucial elements exists today for measuring credit risk, and industry practice has not yet converged around a particular measure of credit risk, or even a conceptual definition of credit loss. some models, for example, identify a loss only when a borrower defaults, largely reflecting the view that the bank will hold the asset until it matures. if the model forecasts a default during the relevant time horizon, it then calculates an expected loss, or “ loss rate, given default. ” other models take more of a mark - to - market approach, recognizing the gains or losses in the economic value of a loan portfolio resulting not only from defaults or expected defaults, but also from changes in the credit quality of a borrower or from different market and economic conditions. as you can sense, model structures and assumptions become crucial. moreover, the fundamental input — a borrower ’ s credit risk rating — can be highly subjective and is largely determined internally within the bank. some borrowers have public debt ratings from recognized rating agencies, but most do not. even a public rating needs to be translated into the rating schedule of each bank. this lack of credit risk data is a serious weakness, with even large banks lacking enough historical default experience for