we are also watchful of geo - political risks that could pose challenges to the country ’ s trade, remittances, and foreign direct investments. recently, the depreciation of the peso has been a cause of some market unease. such concern is overdone. the peso ‘ s moderate and controlled depreciation mirrors bullish economic growth indicated by strong imports demand, residents ’ increased direct and portfolio investments abroad for expansion and risk diversification ; as well as public and private sector debt prepayments to manage foreign exchange risks. there is also outflow of hot money. we see these as healthy adjustments. 1 / 5 bis central bankers'speeches the peso is expected to be broadly stable over the medium - term, backed by strong underlying economic fundamentals, ready market access, and robust international reserves. our foreign exchange reserve buffer, as of end - october 2017 stands at us $ 80. 6 billion. this is equivalent to more than 8 months ’ imports of goods and services and is greater than our foreign exchange liabilities. we have additional liquidity buffer as well from our regional safety net arrangements. sustained inflows from overseas filipino remittances, business process outsourcing, tourism receipts, and the strong recovery in exports further support the peso. we can likewise look forward to increased foreign direct investments that are attracted by our growth prospects. with the country ’ s external debt on a sustainable downtrend and ample fiscal space, there is scope to pursue high quality investments in physical and human capital that will expand potential output. at the current range, the peso ’ s competitiveness has improved back to 2008 levels as measured by the real effective exchange rate ( reer ) index. the philippine banking system is very stable and very dynamic, with good asset quality, sustained profitability, and adequate capitalization. for the third quarter of this year, total banking system resources expanded by 14. 1 percent year - on - year, to p14. 6 trillion. this was funded by sustained deposit inflows which grew by 15. 3 percent, to p11. 3 trillion. the non - performing loan ( npl ) ratios further improved to 1. 9 percent, with adequate and prudent provisioning for credit losses. bank capital is being beefed up by strong earnings from core income sources particularly lending activities. capital adequacy ratio, recorded at 16. 0 percent on consolidated basis, is well above the bsp and international

procedures for low - risk clients to facilitate frictionless customer on - boarding. more recently, the monetary board approved the cyber security risk management framework under circular no. 982. finally, we are pursuing digitization of the payment system as part of our firm commitment to the national strategy for financial inclusion. the bsp is actively working to make universally available to all a basic transaction account in a bank or regulated non - bank financial institution, to be able to send and receive payments via any electronic device. at the same time, we are working with other government agencies and congress to establish a biometric national id system. these two — universal transaction accounts and a digital id system – are key foundations of a robust and inclusive digital financial system. we are one step closer to achieving the vision of a cash - lite economy with the recent launch of the philippine electronic fund transfer ( eft ) system and operations network, also called “ pesonet ” last november 8, 2017. this is the first automated clearing house ( ach ) under the national retail payment system ( nrps ). it supports batch payment credit transactions and will eventually replace paper check payments for most applications. early next year, we will launch “ instapay ”, the ach for low - value real time push payments ideal for mobile payments in support of e - commerce. 4 / 5 bis central bankers'speeches conclusion ladies and gentlemen, the heightened convergence of the global and the domestic economy, fuelled by ict revolution, is a force to reckon with. one has to catch opportunities created by these big changes and adapt to manage new risks. as economic agents seek novel ways of doing things, the role of bsp becomes more critical. in this regard, we assure of our commitment and capability to foster an enabling environment so we are ready in the age of the great convergence. thank you for your kind attention. manyika, j. et al. ( 2013 ). “ disruptive technologies : advances that will transform life, business, and the global economy ”. mckinsey global institute, may 2013. 5 / 5 bis central bankers'speeches