for foreign currency bank deposits to ba3 from b1 and the country ceiling for foreign currency bonds to ba1 from ba3. the change in the foreign currency bond ceiling is based on a revised assessment of the risk of an external payments moratorium to low from moderate. - the outlook on the ratings is stable. the upgrade was prompted by the relatively high degree of resiliency exhibited by both the country ’ s financial system and external payments position in the face of the global financial and economic crises. international reserves of the central bank are at a historic high and exceptional policy measures have not been required to shield the banking system from global shocks.

to build up our dollar reserves. one of the lessons we learned from the 1997 asian financial crisis was the value of building up our international reserves for self insurance. based on revised data, as of end - july 2009, our reserves have risen to us $ 40. 0 billion. this is enough to cover about 6. 9 months of imports of goods and payments of services and income, or alternatively, it could cover our short - term external debt payments about three times over. thus, even as we face a slowdown in external demand, the stronger external liquidity position provides us some cushion against shifts in capital flows. our financial markets are showing some signs of recovery. credit spreads have narrowed, the peso has stabilized and its volatility has decreased, and the stock market is on an upswing. our banking system has remained sound and stable. the banking system ’ s asset base has been expanding steadily, supported by sustained growth in deposits. as of end of april 2009, the total resources of the banking system stood at p5. 8 trillion. banks have been offloading their non - performing assets and problem loans. as a result, the npl ratio is now at the pre - asian crisis level of around 4. 0 percent. furthermore, the profitability of the banking system has remained resilient, although with some moderation of late. banks have remained adequately capitalized at levels above both the bsp - regulatory requirement of 10 percent and the international ( bis ) standard of 8. 0 percent. bank lending growth has remained healthy, in part reflecting the easing of monetary policy since the fourth quarter of 2008. credit flows continued to support the productive sectors of the economy even against the backdrop of tight liquidity conditions in global financial markets. it is the bsp ’ s commitment to ensure that liquidity conditions are supportive of the spending and investment needs of firms and households, while keeping a watchful eye on price stability. the recent lowering of the risks to inflation allowed the bsp to cut its policy rates by a total of 200 basis points since december 2008. the bsp ’ s decision to ease the monetary policy stance was based on the monetary board ’ s assessment that inflation would stay within target over the course of the policy horizon. this 200 basis - point cumulative reduction in the policy rate will help stimulate economic growth or help moderate the slowdown by bringing down the cost of borrowing and reduce the financial burdens on firms and households. this will help us avoid or at least