benjamin e diokno : old partnerships and renewed beginnings message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the trust officers association of the philippines general membership meeting, manila, 25 march 2021. * * * to the directors, officers, and members of the trust officers association of the philippines ( toap ), guests, ladies and gentlemen, good evening! it is a pleasure to address the toap once again, this time, at your general membership meeting. it was in november 2020 when i joined your summit. i recall that i challenged your organization to be adaptable, to take advantage of opportunities, so your institution will reach its goals. with the accomplishments of the association, i commend the incumbent officers of toap under the leadership of atty. bobbie conception for ably steering the industry in 2020. 2020 was an extremely difficult year. but don ’ t despair. we are on the way to recovery. we can look to 2021 with guarded optimism. performance of the trust industry nevertheless, the performance of the trust industry in 2020 was impressive. while the level of assets under management ( aum ) for trust and investment management activities did not show significant growth, it is encouraging to note that the aum of unit investment trust funds ( uitfs ) rose by a hefty 22 percent year - on - year by the end of the third quarter of 2020. this development must have been made possible by the online accessibility of uitfs as the number of uitf participants also surged by around 32 percent year - on - year. uitf clients seem to prefer funds that are more liquid and whose products they are more familiar with. as we move forward, we hope that the uitf participants can progress, particularly with respect to the choice of underlying investments, and that in due time uitfs can be an effective vehicle for retail investors to actively participate in the philippine capital markets. apart from uitfs, the bsp expects growth of trust assets to continue this year. following the industry ’ s proposal, the bsp issued circular no. 1109 on february 4, 2021, which lowered to the minimum amount required to maintain an investment management account ( ima ) and to participate in commingled funds to p100 thousand. the circular also expanded the financial assets that a commingled fund can invest in. this is expected to fuel an increase in the

industry ’ s investment management activities as new clients with lower amounts of investible funds can now be tapped. financial inclusion was a major consideration in crafting this policy amendment. we want to make investing more accessible, while providing retail investors with a greater degree of protection. we are confident that these investors will benefit from the expertise of trust entities and that trust entities would continue to exercise prudence in the way they offer their services. economic update to provide a big picture on what lies ahead, let me proceed with an update on the economy and the banking system. 1 / 4 bis central bankers'speeches the economic, social and health effects of covid - 19 are unprecedented. they disrupted economic activity globally. the philippines was not spared : its economy contracted by 9. 5 percent in 2020, its first fall since the 1998 asian financial crisis. but one can argue that the contraction could have been worse had the philippine economy not entered the crisis in a strong position. the uninterrupted economic growth for over two decades prior to the covid - 19 pandemic, the timely structural reforms, the generally manageable inflation, and the hefty gross international reserves – all these have helped cushion the adverse effects of the health cum economic crisis on the domestic economy. our key economic indicators remain encouraging. inflation inflation is manageable and inflation expectation remains anchored. while inflation rates have risen in recent months, they were driven mainly by faster price increases of key food items and higher domestic oil prices. but the upticks in inflation are consistent with bsp ’ s assessment that inflation will remain elevated in the coming months before decelerating in the fourth quarter of the year. inflation is projected to return within the government ’ s target range of 3. 0 percent ± 1. 0 percentage point over the policy horizon. monetary policy will continue to support the various interventions of the national government to alleviate the impact of supply - side factors on consumer prices. balance of payments ( bop ) the country ’ s external position has caught up well despite the weak global demand in 2020 amid the synchronized recession of our major trade and investment partners. for full - year 2020, the overall balance of payments ( bop ) position was at an all - time high of us $ 16. 02 billion. for 2021, we project the balance of payments to be us $ 6. 2 billion or 1. 6 percent of gdp. gross international reserves ( gir ) meanwhile, the country ’ s gross international reserves ( gir ) level remains