These countries have sought a return on their financial capital abroad by investing, for instance, in US treasuries. The increased demand for US treasury bonds has for a long time been pushing down long-term interest rates in the United States. In addition, the US central bank conducted expansionary monetary policy in connection with the recession at the beginning of the 2000s and in the years immediately following. The low interest rates have stimulated consumption and investment in the United States. They contributed in particular to house prices rising more quickly than household incomes. The rising stock market and house prices contributed to a reduction in household saving, which largely explains the rising current account deficit until the housing market bubble burst. However, the problems of a previously overheated housing market are not limited to the United States, they can also be found in a number of other countries. New forms of borrowing, including subprime loans, contributed to overheating in the US housing market During the years 2004 and 2005 new loan forms became increasingly common in the housing market in the United States, not least subprime loans. Subprime loans are loans aimed at households with low incomes. Often the lenders used very low interest rates during the first two years of the loan as an enticement. However, after this period the interest rates rose substantially. It is likely that the credit assessment of the households was not too comprehensive.

Over the past few years, manufacturers have invested heavily in machineries and systems to increase utilization of automation as evidenced by increasing robot installations in Thai factories4. Firms in non-manufacturing sector are also moving fast in adopting new technologies—from banks and telcos offering more efficient digital financial services; shops abandoning physical storefront and employing e-commerce and social-commerce platforms; and to firms advertising through social media platforms. To encourage further technological adoption and improve adaptive capabilities, to ultimately build resilience, it is also important that regulatory environment is conducive to fostering innovations. And it is with this goal of facilitating innovative environment that the Bank of Thailand took on a number of initiatives in recent years. These include  Continuing regulatory reform on foreign exchange regulations to remove outdated requirements, allow for greater flexibility in foreign exchange management, and improve ease of doing business;  Relaxing money transfer business ownership requirements to allow for greater competition and reduce cost of cross-border money transfer;  Streamlining our regulatory sandbox scheme to allow new fintech products to reach market faster;  Collaborating with the banking industry to explore use of central bank digital currency for domestic wholesale banking settlement operations; and  3 For instance, Thailand is ranked top ten in number of Facebook users according to Statista (2019). https://www.statista.com/statistics/268136/top-15-countries-based-on-number-of-facebook-users/  4 According to International Federation of Robotics, Thailand’s robot sales increased by over 30 percent between 2015 and 2017 and are expected to grow at an annual average of more than 20 percent over the next three years.