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In our view, the key issue here is to reduce a possible large swing in the availability and the price of credit stemming from the tendency of banks to underestimate risks in good times, and then to overestimate them in bad times. On this, our approach has been to ensure that banks’ capital and riskmanagement policy is forward-looking by using a combination of three instruments. The first is stress testing to ensure that bank’s own internal process for assessing the adequacy of capital and overall risk management is alert to possible key risks. Thai banks have begun conducting stress tests as part of the supervisory process since early last year when we first underwent the FSAP assessment. From our experience, we find stress testing to be a useful and effective instrument for helping banks in formulating strategy for capital and risk management in a forward-looking manner. Also importantly, it provides a formal process for a two-way dialogue between banks and supervisors on risk management and on other financial stability issues. The second instrument is the fair value accounting rules or IAS 39, which we have adopted for non-performing loans and for structured products. In our view, these rules can help strengthen market discipline over bank lending and investment. And because fair valuation involves marking to market, its adoption also helps make provisioning for asset impairment more forward-looking. The third instrument is prudential policy to limit excessive procyclicality.