This will reduce transaction costs and mitigate exchange rate risks under today’s volatile financial market conditions. In addition, direct exchange rate quotations for currency pairs involving the Thai baht are now available including the Chinese Yuan, the Malaysian Ringgit, the Indonesian Rupiah, and, most recently, the Japanese Yen. On top of promoting local currency usage, the Foreign Exchange Regulation Reform implemented last year would further complement regional financial connectivity by making foreign exchange-related transactions more flexible and accessible. To give a few examples, foreign exchange transaction form was completely abolished; qualified companies are now allowed to conduct foreign exchange transactions and hedging based on their own risk management practices without having to request for approval on a transactional basis; commercial banks are also allowed to provide loans in Thai baht to non-residents investing in the region; and the coverage of qualified investors allowed to directly invest abroad has been expanded to include retail investors within a wider range of wealth. All in all, the outlook and prospect of digitalization and regional financial integration look very promising and the Bank of Thailand will continue to facilitate timely development of new financial innovations while also safeguarding financial stability in an efficient and business-friendly manner to ensure a smooth and successful transition of the Thai economy. 9/10  Ladies and gentleman, I have now come to the end of my talk and let me give you a brief summary of what I have said today.

If assets market are booming and perceived returns are high, banks will always find the necessary capital. Conversely, capital dries up during downturns, when it is most necessary. Introducing counter cyclical capital requirements will certainly help. But we may not have looked enough into the interrelated dynamics of stock and credit markets; or, put differently, on how capital flows in and out of the financial sector during different phases of the economic cycle and what are the consequences on credit flows. Finally, tailoring capital requirements to the definition of economic capital by banks themselves strengthens the incentive function. But from, a macroprudential perspective, by replicating closely private risk management methods and metrics, this encourages uniformity in behaviour, which, by itself, is a source of instability. It is becoming increasingly clear, it seems to me, that if we want prudential supervision to effectively pre-empt the build up of imbalances, it has to act more directly on individual and collective incentives. This should push us to look more closely at the "accountingcompensation" nexus. When looking at revenues drawn from a financial investment, it is generally impossible to distinguish excess return from additional risk taking. Ignorance of tail risk fits perfectly in this framework. This points to a possible solution: regulatory systems should force the pricing of risk in all its dimensions, including liquidity risk. Again, there is a clear analogy with tax theory: "internalizing" the risk eliminates market failures. The conceptual challenges in quantifying, for instance, liquidity risk, are enormous.