amando m tetangco, jr : working together for a better nation speech by mr amando m tetangco, jr, governor of the central bank of the philippines, at the general membership meeting and induction of 2006 - 2007 officers and directors, bank marketing association of the philippines ( bmap ), makati city, 26 january 2006. * * * distinguished officers and members of the bank marketing association of the philippines ( bmap ), colleagues and friends in the banking industry, special guests, ladies and gentlemen : good evening! thank you for this privilege of once again witnessing your first general meeting for the year and the induction of your newly elected officers. it is comforting to note that your 2006 officials are mainly re - electionists, led by your president mr. roberto banaag. your membership made a wise decision as this move ensures, among others, continuity and consistency of your programs and advocacies. we expect this to consequently translate to bmap ’ s sustained support of the priority reforms that we, at bangko sentral, continue to implement for a more stable and dynamic, more efficient, more depositor - and customer - friendly banking system. bsp reform initiatives the bsp indeed has taken bold and decisive moves. we believe we have already mounted the appropriate regulatory framework for the prudent conduct of banking business in these challenging times through the reforms initiated by my esteemed predecessor. the next thing to do is to make this work. foremost on our must - do - list is the alignment of existing regulations with international standards and the promulgation of policies more responsive to the growing competitiveness and sophistication of the financial services industry. we are now following through on the enhancements of regulations to strengthen corporate governance, risk management, and capital adequacy in our banks, which would be complemented with effective and efficient enforcement. in line with these commitments, the monetary board ( mb ) recently approved the issuance of three major regulations covering : • the new financial reporting package ( frp ) ; • the guidelines on supervision by risk ; and • the guidelines on information technology ( it ) risk management the new frp effectively amends the manual of accounts moa ) and revises the reportorial requirements for banks to align these with the provisions of the philippine financial reporting standards ( pfrs ) / philippine accounting standards pas ). to the extent possible, we have integrated in the new frp the requirements of the

2 and 3 percentage points in the 2011 - 13 period. 8 b - achieving a gradual normalisation of our monetary policy, based on our three fundamental principles against this backdrop, i am convinced that the normalisation of our monetary policy – which has already begun – remains desirable. but it must be gradual, and consistent with the three principles that have sustained us for the past 20 years. 1 - we need to keep our options open in the face of the current uncertainty : we are predictable, but not precommitted. this is also an aspect of our independence, at a time when many are pressing us to provide further details for the past 3 years, we have published guidance roughly every 9 months on how we intend to conduct our net purchases over the subsequent 12 months, and we have always stuck to this forward guidance. as a result, the end of our net purchases at the start of january, despite being a major decision, caused no negative reaction whatsoever in the financial markets. our past credibility gives us a certain amount of freedom with regard to the future. i would also add that we have now clearly outlined the sequencing of our normalisation : first a rise in key interest rates, which will not come until at least through the summer, and in any case for as long as necessary to ensure sustained convergence of inflation towards our target – i shall come back to this later ; then, and only then, after an extended period, a gradual reduction in the reinvestment of the stock of acquired assets. in my view therefore, we do not need to give additional guidance on the timing or other details of the process until next spring, when we could be more precise about the sequencing according to the latest economic data. nor do i see any need at present to review the future operational framework of our monetary policy : because this question will only arise once we have actually achieved normalisation, and because the tools of our monetary policy are already well known. the range of tools was expanded considerably over the course of the crisis ; we will no longer use them all once we have reached the " new normal ", but it is in our interest to keep them all to hand. clearly, our monetary policy will remain accommodative for as long as necessary to achieve our inflation target. 2 - a better understanding of the path of inflation of course, our main focus remains price stability. in 2019, the fall in oil prices will have a significant downward impact on inflation. after peaking at 2. 2