inclusion. to truly unlock the potential of digital innovations for inclusive finance, we need to build pillars that enable and promote the use of digital finance. the first pillar is the digital infrastructure. indeed, digital connectivity is a pre - requisite for digital finance. yet, speed, affordability, and availability of internet connectivity are important factors that determine adoption of digital finance, particularly in the rural areas. overcoming the barriers to digital connectivity will not only promote accessibility to digital financial products, but will allow innovators to improve the design, enhance security features, and drive down the cost of financial services. another important infrastructure is the digital id system which is why the bsp is looking forward to the implementation of the philippine id system or the philsys. beyond its ability to address the lack of identity documents commonly cited as a barrier by the unbanked, the philsys through its electronic kyc feature can significantly reduce the cost of onboarding new clients by as much as 80 % based on a study commissioned by the asian development bank. such a digital id system can also enable the delivery of innovative end - toend financial services. the second pillar would be the digital payments use cases. it is not enough that people are able to easily open a transaction account. people should see the necessity of an account and be able to use that account for various payment transactions on a regular basis. what can compel people to open a transaction account? for the wage earners and informal workers, receiving wages and social benefits is one. being able to use a mobile phone to pay market vendors, jeepney drivers, utilities and online purchases is another. 3 / 5 bis central bankers'speeches the regular use of transaction accounts will not only catalyze digital payments but also enable the account holder to build a richer digital footprint for his credit profile. this is the focus of our intensified coordination efforts with the department of social welfare and development, the department of labor and employment, and the department of transportation. to provide the public with digital payment options for transactions with government, we are working closely with the payments industry and the department of finance and the department of budget management on the development of a bills payment platform and on possible policies to address implementation barriers. the third pillar is user trust and readiness. if people do not trust, understand or know how to use digital financial services, people will not use these products even if they are affordable and convenient. to this end, we are committed to our partnership with various public and

. this diagnosis is obscured because symptoms, such as poor credit evaluation by rating agencies and massive securitization, are often mistaken for causes. in order to find causes, economics suggests searching for incentives. in this attempt, it is convenient to begin by verifying that no government policies induce excessive risk exposures. factors with possibly unintended consequences may include policies to maintain low interest rates for too long ; measures to promote borrowing under artificially favorable conditions, perhaps in the pursuit of social objectives such as home ownership ; and, government ’ s guarantees for bailing out private risk exposures. these policies have the potential of promoting moral hazard. in particular, when a market or infrastructure is capable of suffering difficulties that may lead to a disruption in the financial system, they are classified as “ important ”. one problem with this categorization is that the possible systemic importance of institutions varies in time ; an entity which is not considered systemic today may become one in the future. however, a deeper limitation of such classification is that it may exacerbate the risk taking of the agents involved, if they know in advance that, in case of difficulties, the government will protect them against losses. two factors currently stressed as important contributors to the emergence or aggravation of the recent financial crisis are global imbalances and sovereign risk. however, notwithstanding their importance, it is not clear if they can be considered root causes of the crisis. global imbalances come from the hypothesis that a “ saving glut ” during the years prior to 2007 caused interest rates to fall in the united states, thus promoting excessive risk taking on the part of economic agents. the existence of a “ saving glut ” has been debated. arguments against it include historically low saving rates during those years and a possible negative effect from expansionary monetary policy on the u. s. low saving rate. additionally, one must recognize the fact that open economies naturally exhibit current account imbalances as a reflection of investment opportunities and saving motives. 4 nevertheless, while their relevance is still under debate, somehow global imbalances have taken a prominent role in risk diagnosis, ranging from threats to the world economic growth to the eventual emergence of a financial crisis. consequently, the need for balancing current accounts in the world has gained ample acceptance. a potential dangerous outcome of this prescription is a movement toward protectionism and the implementation of a variety of distortive measures. some of this has been evidenced in the capital controls imposed by some