However, we now have new data on which to base our decisions and new opportunities for communicating them. Conclusion Let me try to summarise my message here. I believe that most people agree that inflation-targeting has worked well on the whole. We know that since inflation-targeting was introduced, Sweden has gone from being a high-inflation economy to an economy with low inflation and stable wage increases. The lower inflation rate has not led to weaker output growth; GDP growth has on average been higher under the new regime. It also appears that, if anything, the real stability of the economy has improved. Nevertheless, there is always good reason to consider how monetary policy can be developed and improved. To this end, I have discussed how the Riksbank’s monetary policy work can be developed. This has included what could be termed technical improvements; for instance, greater use of other assumptions than an unchanged repo rate and an extended forecast horizon when producing and presenting data. The advantage of using, for example, implied forward rates as a basis is that they can often be a more realistic assumption than an unchanged interest rate. This can in turn allow more and better alternative scenarios, which can illustrate different aspects of monetary policy including the consequences for inflation and resource utilisation over a longer time horizon. It has also included the Riksbank’s communication. Working with a longer time horizon provides a better overview of the effects of temporary influences on inflation.

These issues include a regulatory framework that promotes financial sector development without compromising financial sector stability, the optimal adoption of international standards for bank supervision, a level-playing field among different domestic financial players, and the competitiveness of the Thai financial system in the ASEAN context of Qualified ASEAN banks, and so on. Ladies and Gentlemen, I believe that the efforts put forth by the BOT will fulfill the objective of enhancing competitiveness and ensuring long-term macroeconomic and financial stability. However, we cannot do this alone, especially in a world of global economic uncertainty, domestic challenges and diminishing fiscal room. A common vision among all stakeholders is necessary for policy coordination. The advanced economies that are now experiencing public debt crisis offer valuable lessons for emerging countries as well as Thailand where planned fiscal spending will add to fiscal debt. I believe that at this crucial juncture, many countries, Thailand included, still have time to manage possible future fiscal stresses. Austerity by means of cutting public spending is one conventional way to achieve fiscal consolidation. However, most emerging and developing countries still require essential infrastructure investment to unleash their own growth potential. Austerity without growth would be futile. Therefore, what is needed is constructive fiscal consolidation rather than dogmatic austerity programs. Prudential cuts can be combined with infrastructure spending to raise competitiveness levels and ensure sustainable long-term growth. Rest assured that the BOT will do everything possible to create a stable long-term economic environment in which businesses can prosper. Thank you. BIS central bankers’ speeches  3