high, the federal reserve must be alert to the possibility that additional action might be called for to forestall excessive credit creation. the federal reserve is intent on gearing its policy to facilitate the maximum sustainable growth of the economy, but it is not, as some commentators have suggested, involved in an experiment that deliberately prods the economy to see how far and fast it can grow. the costs of a failed experiment would be much too burdensome for too many of our citizens. clearly, in considering issues of monetary policy we need to distinguish carefully between sustainable economic growth and unsustainable accelerations of activity. sustainable growth reflects the increased capacity of the economic system to produce goods and services over the longer run. it is largely the sum of increases in productivity and in the labor force. that growth contrasts with a second type, a more transitory growth. an economy producing near capacity can expand faster for a short time, often through unsustainably low short - term interest rates and excess credit creation. but this is not growth that promotes lasting increases in standards of living and in jobs for our nation. rather, it is a growth that creates instability and thereby inhibits the achievement of our nation ’ s economic goals. the key question is how monetary policy can best foster the highest rate of sustainable growth and avoid amplifying swings in output, employment, and prices. the historical evidence is unambiguous that excessive creation of credit and liquidity contributes nothing to the long - run growth of our productive potential and much to costly shorter - term fluctuations. moreover, it promotes inflation, impairing the economy ’ s longer - term potential output. our objective has never been to contain inflation as an end in itself, but rather as a precondition for the highest possible long - run growth of output and income - - the ultimate goal of macroeconomic policy. in considering possible adjustments of policy to achieve that goal, the issue of lags in the effects of monetary policy is crucial. the evidence clearly demonstrates that monetary policy affects the financial markets immediately but works with significant lags on output, employment, and prices. thus, as i pointed out earlier, policy needs to be made today on the basis of likely economic conditions in the future. as a consequence, and in the absence of once - reliable monetary guides to policy, there is no alternative to formulating policy using risk - reward trade - offs based on what are, unavoidably, uncertain forecasts. operating on uncertain forecasts

and services marketable are a set of characteristics that distinguish us from others. this is inherently a “ branding issue. ” as more financial products are made available and technology allows us to move beyond national borders, we need to be clear about who we are and what the philippine banking system stands for. i believe that this will be a vital component of our efforts to prepare for an integrated asean banking community and the further entry of new foreign banks and foreign investors into our banking sector under republic act 10641 and republic act 10574 respectively. the branding characteristics that i have in mind do not pertain to specific facets of products. instead, i would like to highlight how risk management, good corporate governance and consumer protection can and have made a real difference in ensuring the stability of our banking system. it is this stability that underpins our banks ’ value proposition to savers, while providing a viable counterparty for borrowers. the value of risk management cannot be overstated. in a market where uncertainty and risks are hallmark issues, a bank can only be viable as a two - way agent between savers and borrowers if it is able to effectively manage its risk exposures. this certainly matters to depositors who rely on banks to keep their savings safe. products you offer may have bells and whistles ; but in the end, they are only as good as your promise to make the underlying funds available when depositors need them. it matters as well to your borrowers. your ability to keep the bank operating in a safe and sound manner allows them to build a lasting relationship that supports their entrepreneurial initiatives, services their payment requirements, handles personnel accounts and manages their own corporate savings and investments. in the end, effective risk management is the skill that allows market stakeholders to operate as a going - concern. this is a skill unique to banks and it must be a success factor that distinguishes the philippine banking brand from the rest. bis central bankers ’ speeches actually, we have achieved such distinction. in the december 2013 report of moody ’ s, the philippines was the only banking system rated with a “ positive outlook ” from among the jurisdictions it reviews. in a recent press statement, moody ’ s declared that it “ maintains positive outlook on philippine banking system in line with our expectation that gdp growth will remain one of the strongest among emerging - market economies over the next 12 – 18 months. ” for its part, fitch said that the fundamentals of our banking sector “ remain stable as capitalization is high