michelle w bowman : welcoming remarks - national agricultural credit conference welcoming remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the national agricultural credit conference, washington dc, 25 march 2019. * * * good afternoon. it is a great pleasure for me to join the federal reserve bank of kansas city in welcoming you to the federal reserve board for the 2019 national agricultural credit conference. for nearly 80 years, these meetings have been at the forefront of important discussions for those with a stake in agricultural lending, with the first national agricultural credit meeting held in 1941. at that time and with war looming, there was a clear need to ensure that our nation ’ s farmers had the resources and capability to support the nation in the wake of the great depression, deflation, and the dust bowl. this meeting provided a vital forum for candid conversation, to exchange information, and to forge relationships that would enable lenders to take steps to ensure a sound future for agriculture — a future supported by the efficient and effective provision of credit. in the decades since that first meeting, this conference has seen a number of boom and bust cycles in agriculture, most often the result of volatile swings in commodity prices, land price valuations, and borrowing costs for agricultural business owners. through all of these challenges, this conference has provided an important opportunity to promote a greater understanding of emerging issues in agricultural finance. further, the success of these meetings largely depends on the interactions of everyone here today, so i want to thank you for attending and for participating. i am honored to welcome you to the first conference meeting to be held at the federal reserve board. and i ’ m pleased to support this group ’ s mission to foster discussion on issues pertaining to ag finance, and i look forward to meeting with you and learning from the discussion. today and tomorrow, we will discuss recent developments in agricultural credit markets. we will also hear from presenters on topics that connect in various ways to the agricultural sector. i am especially pleased to see there is a special focus on rural communities at this year ’ s meeting. as many of you know, this topic holds a special place in my heart. my family has deep roots in rural kansas and a long history in farming, ranching, and ag banking. i have spent much of my life and career living, working, and raising a family in a rural area. rural communities are critical for our nation for many reasons including food production and processing, manufacturing, and leading

a sound and stable financial system is the centerpiece of this agenda. within this framework, the development of the philippine capital market is being given high priority alongside the continuous reform of the banking system. capital market initiatives already underway is a series of reforms in the philippine capital market intended to : create a sound market infrastructure, enhance transparency and market discipline mechanisms, promote greater investor protection, and strengthen the legal and regulatory framework. toward this end, the following are some of our key contributions : delivery of securities in july 2003, the bsp issued regulations mandating the proper delivery of securities by dealer banks and non - banks to the investor. this is meant to promote transparency and discourage proliferation of manipulative practices. accreditation of third party custodians the bsp subsequently issued regulations on the pre - qualification criteria for banks and nbfis that will operate as securities custodians and defined the functions and responsibilities of each. it is important that we develop the custodian as an important agent in the capital market that can facilitate the lending and borrowing of securities. market infrastructures the bsp also supported private sector - led initiatives to establish a fixed income exchange ( fie ) intended to improve the current market infrastructure. the fie centralizes trading of securities for enhanced transparency and efficient price discovery. at present, transparent pricing has been achieved for the interdealer market, as quotations are available on a per security basis, and executions are at the best bid and offer. in the future, we hope to see efficient price discovery for the common investor in the public market phase, as price and trading data will be made available on a timely basis. expansion of the menu of financial products the domestic capital market remains shallow and underdeveloped. in response, the bsp has issued various circulars diversifying the menu of financial products available in the capital market. traded papers like unsecured subordinated debts ( as tier 2 supplementary capital ), long - term negotiable certificates of deposits or ltncds, documented repos, and securitization structures create marketoriented opportunities for banks and other players and deepen the capital market. recently, we have issued circular 503, amending the guidelines on risk - based capital framework to include hybrid tier i instruments as part of qualifying capital. hybrid capital instruments that have equity - like features enable them to absorb losses similar to common equity. however, these instruments must be perpetual and redeemable by the issuer subject