Capital adequacy ratio (CAR) is at 17.6 percent, well above the 8.0 percent prescribed by the Bank for International Settlements (BIS) and the BSP’s 10.0 percent minimum requirement. Exposure to bad debts remains manageable. Average non-performing loans (NPL) ratio stood at 3.9 percent as of end-November this year, much lower than the double-digit figures in the aftermath of the Asian financial crisis.
In my remarks this evening I would like to address a different topic, but one that is no less important: how central banks interpret yield curve movements, and how this process might influence our monetary policy considerations. Policy actions and the yield curve Let me start by clarifying what I mean by “yield curve”.