bandid nijathaworn : thailand ’ s economic outlook – an update speech by mr bandid nijathaworn, member of the board of the bank of thailand, at the australian - thai chamber of commerce dinner talk, bangkok, 14 july 2010. * * * first, let me thank the australian - thai chamber of commerce for the invitation. this year has been a particularly challenging year for thailand, on account of both developments in the global economy and the political situations at home. so, what i want to do today is to give you an update on thailand ’ s economic outlook, particularly to see what these challenges have meant for the thai economy, as well as for the outlook going forward. a keyword this year is “ uncertainty ”. as you well know, the market does not like uncertainty because it raises risk and costs. for the global economy, this year has been an exceptionally “ complicated ” year because of the two major uncertainties that have contributed to an unusual degree of volatility in global financial markets. the first is uncertainty surrounding the strength of global economic recovery which has been weighed down by the high levels of unemployment and slow bank - lending growth in the advanced economies, as well as prospect for higher long - term interest rates in the major economies linked to the financing of public sector deficits. this is the first uncertainty. the second uncertainty is policy. for the advanced economies, it is the uncertainty about the timing of exit policy, and whether the commitment to fiscal consolidation by the major economies can be sustained given the adverse implications for growth. for emerging markets, there is uncertainty about the policy approach that emerging markets will use to manage large capital inflows particularly in asia. this involves the policy choice between exchange rate management, monetary policy, and the use of macro - prudential and capital control. in my view, uncertainty about policy has been of most concern for financial markets, resulting in increased volatility and a constant shift in investor sentiment between risk aversion and risk appetite. as for thailand, in addition to the global uncertainties, we also have our own home - grown uncertainty linked to domestic political developments, which have added another dimension of risk to economic recovery and to the prospect of thailand ’ s growth in the longer - term. how has the thai economy performed so far amidst all this risk and challenges? today, an important decision was made by the bank of thailand ’ s monetary policy committee to begin a process of policy normalization by

wholesale central bank digital currency ( cbdc ), where design and technology choices are being explored. meanwhile, there remain many puzzles and unknowns, where the costs and benefits are unclear and require much more research, study, and debate to identify potential impacts or to assess whether a particular development should be pursued. these include unknowns such as introduction of retail cbdc, which can have implications on the business model of banks and the financial sector and on transmission mechanism of monetary policy. or, broader issues such as the autonomy of central bank ’ s policy, which will be challenged by bigtechs and cross - border technologies, as much of central banking has been designed based on a world with national borders. other unknowns will arise in the future ; all of which dictate that we have to be nimble and forward looking. ultimately, when facing the challenges from the knowns and unknowns, the role of central banks is not only to understand key issues and provide stewardship in the right direction but also to ensure that benefits and costs are well balanced and unintended consequences minimized. during the period of rapid digital transformations, there is no denying that digital divide can worsen, especially in emerging economies. there will be those with access, are able to take advantage of technological advancement, and prosper ; and those who lack access or capability to leverage on modern technology, fall behind, and perish. finding that right balancing will certainly be a challenge for us, central bankers, but it can be an area where international collaboration and networking platforms, like the seacen centre, can play a role. refining the knowns, looking ahead for the unknowns, and balancing our actions. these are how we should approach our policy questions. i am glad the seacen and its organizers have selected a number of topics that will allow us to think deeply about digital transformations and implications for central banks and encourage that future seacen activities put even greater emphasis on how we can balance our policy actions and enhance collaboration among members in this new area. i would also like to thank the group of scholars and practitioners here with us today, who will share their thoughts on many important topics, help broaden our perceptions of the knowns, and shed some lights on the unknowns. 3 / 4 and on this note, allow me to introduce governor duvvuri subbarao, former governor of the reserve bank of india and currently a distinguished visiting fellow at the institute of south asian studies of the national university