The progress can be observed by both trade with CLMV, which has been growing annually with double digits over the past 4 years, and more efficient allocations of capital and resources as seen in an increasing number of Thai companies doing outward Foreign Direct Investment. In addition the SMEs, which account for approximately 95% of total businesses in Thailand, have been playing an essential role in driving the economy and will continue to do so going forward. They are an integral part of the supply chain and one of the key success factors of Thailand’s previously-mentioned high-potential industries. There are also SMEs who have the capability to produce high value added products by creating their own innovation such as the seasoning packages you see in Asian grocery stores here. Another example is ready-to-drink coconuts, a product that combines a coconut in its natural shell with an opener such as one you’d find on a soft drink can. It is a recent entrepreneurial product that has outstanding growth in exports since launch. In 2004, the Bank of Thailand launched the Financial Master Plan which aims to increase efficiency and financial access by promoting competition in the market. Since implementation, we have observed the improvement in Thailand’s financial infrastructure from reduced cost-to-income of commercial banks and particularly from SMEs’ greater  BIS central bankers’ speeches  3  financial access. The cost of raising funds in Thailand has been reduced through the welldeveloped financial market since more players are allowed to offer variety of financial products.

I want to emphasize the word limited. Notwithstanding Adam Smith’s own reference to government intervention, the role of government must remain a limited one. If temporary market imperfections or difficult market adjustment periods give rise to the justification for relentlessly expanding the role of government, there will be a point when markets will no longer function effectively and when welfare creation will seize to advance. There is no better breeding ground for irresponsible behaviour than an environment of economic stagnation or worse, welfare decline. BIS Review 38/2005  1  There are times in history when the world economy undergoes fundamental structural change. With the rapid integration into the global economy of China and India, we are experiencing such historic change. Fundamental structural economic change invariably produces economic victims. The temptation for governments to interfere excessively with the free market is therefore particularly acute during periods when dramatic change occurs. Paradoxically, it is precisely then that the forces of the “invisible hand” are most needed to help bring about the welfare that can ultimately help absorb the negative externalities of change. If I am right that we are currently traversing such a period of historic change, it is more important than ever to ensure that government intervention in markets is limited and remains subject to continuous checks. Free markets under the rule of law, Ladies and Gentlemen, provide the optimal path to welfare creation and ultimately responsible behaviour by market participants.