In July 2004, upon an assessment that the booming economy may result in the buildup of certain financial imbalances, the Monetary Policy Committee made the monitoring of “factors contributing to financial imbalances" a permanent part of its assessment and policy formulation process. As part of this macro-financial risk surveillance, signs of financial imbalances in seven key areas are regularly monitored: the property market, the stock market, the banking sector, the non-financial corporate sector, household-sector balance sheet, government finance and public debt, and the external sector, with the goal of establishing an early warning system for potential threats to financial stability, especially if the underlying imbalances are related to monetary policy actions. On the regulatory side, fully aware of the implications of systemic risk, we have incorporated macroprudential elements into our regulatory framework well before the concept became popular in the wake of the global financial crisis. Although we did not use the term, some of the prudential measures that we have deployed in the past few years were in the spirit of macroprudential policy of enhancing the resilience of the financial system over the cycle and of restraining the buildup of systemic risks. For example, in 2003, when we observed rising high-end real estate prices along with strong mortgage lending, we imposed a ceiling on the loan-to-value (LTV) ratio for residential property with the transaction price exceeding 10 million baht. Later in 2004, observing a significant credit card loan growth, we placed limits on credit card borrowing by instituting a minimum income requirement, among others.

Tarisa Watanagase: Thailand’s economy and resiliency – 2008 and the road ahead Address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the American and Thai-Canadian Chambers of Commerce Luncheon, Bangkok, 26 September 2007. *  *  *  Distinguished Guests, Ladies and Gentlemen, Good afternoon. I am delighted to join you at this luncheon gathering of prominent members of the American and Thai-Canadian Chambers of Commerce and business community in Thailand. After a sumptuous lunch, allow me to present you more food – for thought – on the prospects and challenges of the Thai economy going forward. And since most of you know Thailand and our economy very well indeed, I would like to take this opportunity to share with you my perspective from the policy making and implementation side. For policymakers, our bottom line is to best balance short-term pains and long-term gains. To ensure the sustainable progress of economic development, we cannot afford to misplace focus on short-term concerns but must instead weigh the short-term and long-term objectives very carefully. Moreover, the sustainable development progress is made up of numerous elements, of which I would like focus on three things today. First is maintaining the economic growth momentum together with internal and external stability. Second is building the economy’s resiliency to withstand volatilities and shocks. And, third is strengthening the rules of the games for trade and financial integration, including the international best practices for financial institutions.