2 And we have taken further steps in this direction over the past two years in particular. But what are the reasons behind this development towards greater openness? I think there are two reasons – democracy and efficiency. The first concerns our role as an independent authority. The second is linked to the fact that our communication with the financial markets and the general public is essential for monetary policy and the financial system to function efficiently. 1  Page 38 in Blinder, A. S., (2006), “Monetary Policy Today: Sixteen Questions and About Twelve Answers”. I Fernandez de Lis, S. and F. Restoy (ed. ), Central Banks in the 21st Century, Banco de España. 2  See, for instance, Eijffinger, S. and P. Geerats, (2006), “How Transparent are Central Banks?” European Journal of Political Economy, vol. 22, 1-21. BIS Review 106/2007  1  Our independence requires openness The Riksdag and ultimately therefore the Swedish people have given the Riksbank considerable independence. But this is a “freedom with responsibility” that goes hand in hand with the requirements for insight and accountability. This is how things should be in a democracy. Openness is also something that traditionally imbues the Swedish public administration system in general. One of the corner-stones is the principle of public access, which means that the authorities’ activities should as far as possible be carried out in an open way. And this also applies to the Riksbank, of course.

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