intervention has had a decisively positive impact on the outlook for earnings. short - term interest rates are at very low levels indeed. the yield curve, ie the spread between long - term and short - term rates, is exceptionally steep. this naturally allows substantial income to be generated from maturity transformation ( see chart 1 ). income from commissions and fees has also soared recently, partly on the back of the large - scale issuance of government bonds which the public sector has been obliged to launch in response to the financial crisis. income from commissions and fees is being further boosted by vigorous corporate issuance activity. this has also begun to boost equity and credit markets since the spring of 2009, thus improving banks ’ earnings form brokering and proprietary trading. nonetheless, this development is fragile. it is being buoyed by the nonstandard public sector support packages which – being extra - ordinary – have to be phased out at some point. quite clearly, the current conjuncture does not represent a new post - crisis normality. yet this by no means implies that german banks have not recognised the seriousness of the situation. they have consolidated their balance sheets and also bolstered their capital buffers ( see chart 2 ). for instance, the average tier 1 capital ratio rose by 2. 4 percentage points between mid - 2007 and mid - 2009. another positive aspect is that, by international standards, germany is in a comparatively favourable starting position for weathering the financial crisis. for one thing, domestic enterprises and households have relatively moderate levels of debt. consequently, the percentage of non - performing loans is correspondingly low. for another, real estate prices in germany have been flat for a long time, and have thus in no way decoupled from fundamentals. obviously, this is limiting credit risk in property financing. nonetheless, even in case a lasting economic recovery is underway, german banks will have to tackle some sizeable problems. for instance, their balance sheets will have to accommodate substantial further value adjustments. based on our empirical assessment, for the 17 banks mostly involved, with some €90 billion of impairments already recognised, the peak of write - downs on securitisations is behind them. given current prospects, additional write - downs on structured products of some €10 billion to €15 billion are to be expected ( see charts 3 and 4 ). if, however, the price recovery in evidence since mid - 2009 continues, losses in the overall portfolio will be lower. the outlook for the

in terms of population. the importance of msmes to our country and our people cannot be overemphasized : they account for 35. 7 % of our economy as measured by gdp, constitute 99. 6 % of registered firms and employ 62 % of our workforce. in other words, additional support granted to msmes will have strong multiplier effects. we are happy to learn therefore that quezon city - based coops in cooperation with the office of the mayor initiated discussions with the bangko sentral for the creation of its own csf. thus today, we have 12 cooperatives who have initially contributed p3. 95 million to the csf while the quezon city government will give a counterpart contribution of p5 million. additional contributions will also come from dbp, landbank and the iglf. let us therefore thank land bank as represented by its president gilda pico ; the development bank of the philippines represented by chairman jose nunez, jr. ; and the industrial guarantee and loan fund represented by its chief executive officer benellagua. bis central bankers ’ speeches on our part, you can count on the bangko sentral ’ s continued support to make this collaboration sustainable. we will continue to advocate and introduce more innovations, promote capacity building, and provide liquidity support through our rediscounting facility. finally, i can share that the bangko sentral is in final stages of discussions on new partnerships with other lgus and cooperatives to set up additional csfs in the country. indeed, the spirit of cooperation of bayanihan is alive and well in our country. if we sustain this momentum, we can truly achieve sustained, balanced and inclusive growth. muli, maraming salamat. mabuhay ang msmes! mabuhay ang quezon city! mabuhay ang ating mahal na bansang pilipinas! bis central bankers ’ speeches