in the financial system. financial stability is a necessary condition for efficient monetary operations and is in itself an important component in a country ’ s sustained macro economic growth. since the ncb will still be the lender - oflast - resort the knowledge gained from its financial stability analysis will be crucial in a crisis situation. but the ncb cannot perform an efficient financial stability analysis, nor act as lender - of - last - resort without close cooperation with the supervisory authorities. the other authorities will also benefit from the stability work by the ncb. conclusions let me try to sum up. my first conclusion is to use the american expression “ if it ain ’ t broke don ’ t fix it ”. if bank supervision works well in your country, let it be as is and strengthen the other sector supervisors instead. operational independence should be implemented and at the same time rules for accountability and transparency. this is more important than the structure of the supervisory authorities. if you see good reasons in your country for changing the supervisory structure, you should follow a transparent process and be clear of the consequences. for obvious reasons, you must avoid making organisational changes when the financial sector is weak. nor should you change during major developments in the financial sector, such as the introduction of the bank capital framework basel ii and the new accounting standard ias 39. the structural change must be accompanied by measures to strengthen the capacity of the new authority. otherwise the change is merely cosmetic. in many countries there is a political pressure to change the supervisory structure to show expediency, in particular when there has been a financial crisis and irrespective of the supervisory agencies ’ roles and behaviour before and during the crisis. as a result banking supervision may in such cases be moved out of the central bank or, at other times, into it. also the unification of the supervisory authorities is sometimes seen as a political issue. in my experience, there is not much to gain from a political point of view. on the contrary, the politicians might be blamed for future failures of supervision. finally, the time has come to answer the question in the title of this presentation “ is there an optimal way to structure supervision ”. my answer is “ no ”. the different supervisory structures reflect the specific situation of their countries, which may change over time, and there is no globally agreed best practice. as former chinese chairman deng xaioping once said : “ the colour of the cat does not matter as long as it catches the mice

prasarn trairatvorakul : policy forum marking the bank of thailand ’ s 70th anniversary welcome remarks by dr prasarn trairatvorakul, governor of the bank of thailand, to the bank of thailand ’ s 70th anniversary and 3rd policy forum, bangkok, 12 december 2012. * * * governor glenn stevens, distinguished guests, ladies and gentlemen, 1. it gives me great pleasure to extend a warm welcome to all of you, our distinguished guests, to the bank of thailand ’ s policy forum. today ’ s gathering marks the third such event organized by the bank of thailand. the policy forum serves as a platform for prominent academics, policy - makers and market participants to learn from the visions and insights of outstanding international leaders. more importantly, the discussion and knowledge - sharing arisen from this forum will further equip the bank of thailand with a broader and deeper pool of knowledge to pursue its mandate. on that note, let me add that this year marks the 70th anniversary of the bank of thailand, an institution that has always been committed to preserving economic and financial stability. this commitment would not be possible without continual upgrading of our knowledge base through forums such as the one today. 2. today, the bank of thailand is truly honored to have governor glenn stevens of the reserve bank of australia with us to share his thoughts on “ challenges for central banking ”. this talk is especially timely because the effects of the global crisis are spreading to our region. asia is clearly slowing amid the weak us economic recovery and the euro crisis. at the last policy forum, dr. wolfgang schauble, federal minister of finance of germany, spoke at this forum and shared with us his views from the eye of the storm. now, as the storm moves east to asia, governor glenn stevens will be able to share with us his views from the perspective of our region with respect to the external challenges we are facing. 2 3. apart from common external challenges, australia and thailand also share many internal characteristics as well as a similar monetary policy framework. for example, both are open economies. both export commodities and import oil. the reserve bank of australia ( rba ) practices inflation - targeting with a flexible exchange rate. in fact, it is considered a pioneer among central banks as it adopted inflation - targeting in 1994. as you all know, the bank of thailand also practices inflation - targeting with a flexible exchange rate. both australia and thailand recently experienced substantial exchange rate swings amid the