Firstly, the role of maintaining economic stability that I described earlier in this talk, as stability is a prerequisite to structural changes that lift productivity. Secondly, the developmental role, a form of supply-side policies, to enhance financial sector efficiency and create a favorable financial environment for investment that would lead to higher productivity growth. The importance of financial markets has long been realized by the Bank of Thailand as being the crucial part of growth potential. Indeed, our annual economic symposium this year, “Rethinking Finance for Sustainable Growth”, will discuss the links in detail. A healthy financial market can distribute funds to the parties that can bring most value out of them. For example, investors in the stock market closely monitor businesses, and will withdraw funds from those that have low prospects of future growth, moving them to those with better prospects. The growth prospects will be realized, and in aggregate will improve the whole economy’s growth potential. A well-developed financial market also lowers the cost of raising funds, as the increased competition broadens the variety of financial products offered. An SME for example, whose credit-worthiness is difficult to assess compared to a corporation, might be limited to self-funding in a less-developed market. But in a well-developed financial market, corporations can turn to other channels, leaving commercial banks more incentive to serve SMEs. In 2004, Financial Sector Master Plan Phase 1 was adopted and, to continue improving the financial sector, Financial Sector Master Plan Phase 2, the current phase, was launched in 2010.

Although the SMR is only a year old and we are all learning by doing, there are encouraging signs that it is making a difference. 7  See FSB press release at: http://www.fsb.org/2017/02/fsb-assesses-implementation-progress-and-effects-of-reforms/. Additionally see FSB “Stocktake of efforts to strengthen governance frameworks to mitigate misconduct risks”, forthcoming March 2017. 8 The SMR came into effect on 7 March 2016. Insurers are required to meet similar standards under Solvency II and in future, the SMR will apply to them directly, as it will to other participants in FICC markets. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  For firms, the SMR is clarifying and improving governance, accountability and decision-making processes. Senior Managers are increasingly focusing on building cultures of risk awareness, openness and ethical behaviour. In the words of one chairman “responsibility for culture has moved to the top of my agenda.”  9  For supervisors, the regime is helping identify weaknesses in governance and accountability, and encouraging the necessary changes. This is particularly true in cases where authority has historically been blurred such as in cross-border banking. Adoption is spreading. Some international firms are voluntarily adopting elements of the SMR’s certification requirements to strengthen their global operations. And the FSB is now explicitly reviewing the merits of such “responsibility mapping”. 10  Recent events  The SMR has also been adopted by the Bank of England. 11  We chose to because our mission demands that  we hold ourselves to the highest standards of governance and accountability.