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Opening Remarks

Date: 01.21.2005

Place: Bangko Sentral ng Pilipinas

Occasion: Presentation on Basel 2 & Risk-Based Supervision

Speaker: Governor Rafael Buenaventura

My colleagues in the Bangko Sentral ng Pilipinas, good morning.

We have finally reached the crucial part of our journey towards adopting the new International Capital Standards, or more popularly known as Basel 2.  We have made great progress in terms of issuing guidelines that pushed our banks to improve their corporate governance and risk management systems.  We have also made known to the banking industry our Basel 2 implementation roadmap. At present, we are already in the process of finalizing the draft rules for the implementation of the new standards in our banking system two years hence.    While the policy side of the SES is putting on the final touches to our implementing rules of Basel 2, I beckon the implementors–the operating departments–to prepare for the challenging task at hand.

Although I will no longer be in BSP when the curtain will unfurl for Basel 2 in the country, we need to ensure that the stage is properly set for that event. Putting in place the policy reforms that are requisite for Basel 2 implementation is one legacy that we can truly be proud of. In addition, as senior regulators we need to inculcate in the minds of our subordinates the importance of risk-based capital and risk-based supervision. Full compliance with the principles of risk-based supervision is something we have to aspire for since the banking system that our junior regulators will be inheriting is one that is rapidly changing – more exposed to outside developments and changes in financial technology, and thus more exposed to outside shocks.    A banking system that is quite different from what we have in years past.  Hence, following international regulatory standards is not just something that we need to do to impress our country’s creditors, the rating agencies, nor the multilateral agencies. It is something we need to do to keep pace with an increasingly integrated financial world.

I am sure Assistant Governor Espenilla have something more to say on the importance and rationale of these standards. Moreover, he will also formally present to you the Basel 2 overview and the BSP’s implementation plans.

So, without further ado, I now give the floor to Assistant Governor Espenilla.

Thank you very much and good day.

(Note: Presentation on Basel 2 & Risk-Based Supervision, January 21, 2005, Bangko Sentral ng Pilipinas)