5  These efforts should pave way for faster and cheaper transaction and validation, making the entire system more efficient. Let me now turn to the legal side of our financial infrastructure. Regulations must keep up with the fast-moving financial innovations. To create an environment inducive to financial innovations, the Bank of Thailand introduced a regulatory sandbox framework which allows financial institutions to test new financial technologies in a limited scale to ensure that operational risks are contained, and that proper regulatory framework is put in place before the technology is deployed to the public. In addition to the regulatory sandbox, regulatory guillotine is another approach the Bank of Thailand has adopted to revise and, in some instances, revoke laws and regulations to make them relevant in today’s context and reduce unnecessary legal costs for everyone. I should also note that in April of this year, the new Payment Systems Act became effective. The Act unifies previously fragmented payment laws and regulations and enables us to oversee the development of Thai payment systems in a manner conducive to new payment innovations. On the external front, we introduced the Foreign Exchange Regulation Reform to make cross-border financial transactions more flexible and efficient. We have also made arrangements with regional central banks to support the use of local and regional currencies in trade and investment. These initiatives will help reduce transaction costs and mitigate exchange rate risks in today’s volatile financial market. Ladies and gentlemen, In this challenging global landscape, complacency is costly and could be dangerous.

In addition to long-standing issues that are awaiting resolution such as conflicts in the Middle East, tensions in the Korean Peninsula, and Brexit, new sources of potentially abiding fragility keep adding on to this list. The US-Russia conflict, Iran nuclear sanction, the militarization of the South China Sea, and the increased cyber-attacks by both state- and nonstate-actors, are some of the issues that have emerged over the past few years. While heightening geopolitical risks have not led to a serious market correction or slowdown in global economic activities, persistent geopolitical risks still warrant close monitoring, as these could heighten volatility in the financial market and commodity prices, especially that of oil. The last source of risk that I would like to highlight is on the domestic front. While financial stability remains sound overall, there are some pockets of risk that might pose vulnerabilities to financial stability going forward. The prolonged period of low 2  interest rate environment leads to search-for-yield and underpricing of risks. This is especially challenging in a multi-regulator environment, since increased regulations by one agency is likely to simply push the potentially risky financial activities out of the agency’s regulatory umbrella. The evidence of this is presented by risk areas that span across all regulatory bodies’ responsibilities: delayed deleveraging of household debts; large expansion of foreign investment funds with high concentration in some emerging economies; saving cooperatives’ rapidly growing deposits; maturity mismatch of corporate borrowers; and rapid growth of corporate bonds, especially unrated bonds.