In short, a reshaping of global financial landscape. Moreover, the extraordinary macroeconomic and prudential measures deployed to stabilise the market, while having been vital and successful, have left a legacy. There has been a shift in global financial landscape, as rescue and intervention operations led to the redistribution of asset ownership, between state and private sector, and between nations, further complicating the intricate linkages within the global economic and financial system. These forces will, no doubt, have important bearing for systemic risk, cross-border supervisory coordination, and financial stability going forward. These are the dynamics of structural change that unleash a new paradigm for financial market and regulation. At the core of this force is the public demand for greater assurance of stability, through stronger mandate for governance and accountability of financial institutions and regulators. The response to this has been a sweeping reform package championed by the leader of G20 that will reshape the global supervisory standards. Ladies and gentlemen, The key challenge for regulators in emerging markets such as the Bank of Thailand is to deploy strategies that help to ensure that emerging global standards remain aligned with riskbased principle, consistent with emerging markets’ national contexts, and that our adoption of new reforms are based on those measures and reform agendas which are relevant and practical in our context. Equally important, banks in emerging markets such as in Thailand also need to further strengthen risk management to handle changes in global landscape, uncertainty, and strengthened regulatory framework that emerges as a result of this crisis.

This data constraint could also become an issue for some developed markets, given a structural break in data due to the financial crisis and market dislocation. On top of these, there is the issue of level playing-field, as the structure of bank asset and liability in emerging and developed countries may be significantly different. We have found several policies that may have impact on level playing-field, between countries and business models of banks. An example is the application of a simple leverage ratio, which does not take into account inherent risk, because this would tend to penalise banks in developing countries that generally hold less risky assets compared to developed countries. In addition, macro-prudential measures, such as leverage ratio, could likely have a macroeconomic impact, possibly similar to use of liquidity reserve requirement as per classic monetary policy tool, and thus coordination with macroeconomic policy is vital. For central banks with dual role, this is less of a challenge, but for separated regulators, the issue of organisation structure once again comes into play. Turning to the Bank of Thailand’s involvement on these regulatory debates through various international forums – such as the bi-monthly BIS Governor Meetings, the Standard Implementation Group of BCBS, of which we are a member – we have proposed that developing countries be invited to participate in the formulation of new standards right at the beginning, rather than to be included at the later stage of implementation.