This would allow resolutions to be adopted in particular areas by a limited number of countries, with the possibility of other economies joining them at a later stage. This multilateral approach could also be used to approve reforms to adapt the WTO rules to the recent changes in the world economy and thus restore global confidence in a system of trade based on respect for clear well-defined rules, curbing the proliferation of protectionist measures and boosting global growth in the long term. The need to promote the opening up of trade in services, where the potential gains are still substantial, should also be mentioned. Lastly, in the domestic policy realm, the authorities need to adopt a number of policies (boosting labour market flexibility, solid social security networks and education and training opportunities) to satisfactorily address the distribution of the potential benefits of trade among different population groups. The new institutional architecture for the euro One of the structural elements that has changed most as a result of the combined financialsovereign crisis in Europe is the institutional architecture of the euro area. The financial crisis revealed a number of shortcomings and deficiencies in various aspects of the design of the Economic and Monetary Union (EMU), such as the absence of fiscal stabilisation mechanisms for the area as a whole, the lack of crisis management instruments and the incoherence of the supervisory arrangements and of national bank resolution, while there was a manifest need for progress towards genuine financial integration as a logical consequence of the monetary union.

Last year, the joint meeting between the Monetary Policy Committee and the Financial Institutions Policy Committee was first held with the purpose of sharing ideas from different perspectives. It set a stage for both committees to regularly monitor and exchange views on any systemic risk that might occur from the interconnectedness of economic and financial sectors and to form policy response, should further measures be necessary. For this year, the Bank of Thailand will continue to make sure that overall economic conditions stay safe and sound. Yet, balancing among different policy objectives to reach the ultimate goal of macroeconomic stability is even more challenging this year, given the possible risk on financial stability while the global environment is still surrounded with uncertainties. In closing, I would like to outline the key challenges faced by the Bank of Thailand this year: First, on monetary policy. Since the main goal of conducting monetary policy is to ensure sustainable economic growth, the MPC’s decision-making has always based on the risk to economic growth, inflation, as well as financial stability. This year, the challenge would be striking the right balance between economic growth and financial stability as inflationary pressure is well contained in the short run. Given buoyant domestic spending, keeping the policy interest rate too low for too long could give incentive to private sectors to borrow more. Furthermore, low interest rate will encourage depositors to switch to invest in riskier asset which could lead to the problem of asset price bubble in the future.