monetary policy formulation and implementation. to address this, the bsp has had to use a menu of policy actions. we have not limited ourselves to the policy rate. but we have used an enhanced policy tool kit. the kit includes allowing some exchange rate appreciation to account for the structural inflows and macroprudential regulations such as the increased risk weight on ndf transactions. the toolkit also includes a careful build - up of our reserves. reserves are for insurance. but it is not easy to determine an “ optimal level ” as some have suggested. the risks we are now insuring against are also evolving. that said, our experience in the recent crisis and its aftermath has taught us that it is critical to use the right tools for the job. competitiveness is more than the price moving to the second big term in your theme – competitiveness. the bsp ’ s contribution to competitiveness is maintaining a stable macroeconomic environment and banking regulatory framework. within these, the market can plan well ahead, consider expansion, innovate and find market - based solutions to address risks. the bsp ’ s primary mandate is price stability. it ’ s noteworthy that since 2009, the bsp has been successful at keeping inflation well - within the government ’ s official target range. and it appears that we would be able to do the same in 2012 and 2013. our forecast for inflation is that over the policy horizon, inflation should be manageable. therefore our current policy stance remains appropriate. in other words, you can expect interest rates to remain low over this period. but we will make adjustments should circumstances warrant, including, among others, in the event tensions in the middle east escalate and more weather - related supply chain disruptions occur. on the external front, the country ’ s external position is likely to remain robust, which in turn should fundamentally support the peso. our experience has taught us that allowing the market room to determine the exchange rate is equitable and efficient. so far, ( looking at the reer ), the peso has maintained its competitiveness and volatility has just been in line with the region. ladies and gentlemen, the bsp fully appreciates that when finance executives consider the macroeconomic operating environment, your ultimate unit of analysis is the corporate bottom line. you consider every transaction and how it would increase the value of the firm. this is well and good. but the complication arises when these individual “ animal spirits ” do not behave

, our optimism is also tempered by a sense of realism that there are still much work to be done. we have a good head start with the economic and regulatory buffers we built over the years. but these can be easily eroded given the huge resource requirement of the crisis response measures. as we prepare for the partial operations of some economic sectors, we cannot relax our vigilance because the risk of covid - 19 remains high. we should maintain disciplined approach to policy coordination and decision - making. the crisis has bared the vulnerabilities and gaps in existing processes and systems that we need to swiftly deal with to cover lost momentum because of covid - 19. let me expound on four critical structural reform imperatives. first on the list is the modernization of the country ’ s health system to ensure efficient public health infrastructure and resilient crisis preparedness framework. this would require giving incentives for the use of science and technology in health policy decision making. it would require overhauling of healthcare supply chain management. the government must also initiate the formulation of a national preparedness and response framework for disease outbreaks and pandemics, taking into account coordination gaps across different levels of government. second is the need for massive upgrading of the ict infrastructure system and processes as technology will play a pivotal role in reshaping the means of production and the delivery of goods and services in the post - covid world. the demand for digital technology will increase, driven by companies, schools, and government 2 / 4 bis central bankers'speeches agencies implementing work from home arrangements and virtual meetings. digital technology will also be critical in enabling simpler and more efficient transactions with government agencies. business transactions such as online retail, online banking, online medical consultations, and digital payments, will increasingly become a necessity. all these need to be supported by a safe and reliable digital infrastructure system with robust and dependable cybersecurity protection. digital technology is also key to strengthening the government ’ s monitoring and evaluation systems for policy responses and actions. without these capacities, governments may not adequately assess how its policies affect the people and risk having the vulnerable bear a disproportionate burden of the consequences. third is the modernization of philippine agriculture and government ’ s supply chain management system with the aid of digital technologies. this will help ensure that food and other essential goods and services are available, accessible, and affordable. for example, an efficient logistics system for agriculture facilitates the transport of agricultural inputs including farm equipment and machinery