Further, the Philippine banking system capped 2017 with sustained growth in assets, deposits, and capital. This was accompanied by improved asset quality, firm liquidity position, and strong capitalization. Overall, the Philippine banking system remains sound and stable. We expect these improvements to continue. The Philippines’ external position also continues to be manageable amid global headwinds.
In this context, the crisis has forcefully driven home the dangers arising from the fringes of the financial system. Many different types of financial activities had been shifted to the shadow banking system and thus to an area that is not really regulated and about which only insufficient information is available.