the data on the default probability on credit risk is concerned, most countries that just embarked on developing the required database will be at a disadvantage with a shorter and probably less representative series. moreover, for those just recovering from crisis such as thailand, the implied risk from such series collected during the crisis period will be higher than average over a complete business cycle. thus, developing countries will find a high cost before emerging from crisis. ladies and gentlemen, · this pro - cyclical aspect of the default statistics may be an important issue for the global economic recovery. · secondly, some technical aspects remain unclear. in many cases, capital is being calculated to support both expected and unexpected losses, and overly costly. · thirdly, the proposed capital charge for operational risk needs to be made more refined, incentive compatible to risk management, and more practical and less cumbersome in its application. the third aspect of our financial reform is market discipline. · we recognise that sound corporate governance, both in banks and their borrowers, will provide discipline from within, while public disclosure will allow market force to discipline the financial institutions from the outside. · we will launch a new directors ’ handbook for the financial community, which will further encourage understanding and motivation behind good governance, and we will also endeavour to improve the transparency of appointment and compensation. ladies and gentlemen, the last challenge i want to share with you is the strengthening of the bank of thailand to meet future challenges. the crisis of 1997 brought to light weakness in thailand ’ s financial management. the bank of thailand like most central banks in the region, have had to go through sea of changes in the wake of the crisis, and undergo intensive reform of its operation and organization. three areas of change in particular that stands out as our major achievements are internal reorganization, strengthening the framework for monetary policy under inflation targeting, and enhancing communication and transparency of operation. at the onset of the crisis, the bank of thailand underwent major restructuring in the organization structure, data management and work process. these were aimed to ensure the good foundation in our decision - making process particularly with monetary policy implementation and financial institution supervision. a risk management unit has been established to manage operational risks more effectively, by reviewing and monitoring areas of risks in central bank operations with a view to taking forward looking risk mitigation actions. another important area that has been strengthened is in the process of monetary policy operation. the inflation targeting framework adopted by thailand provides sufficient flexibility to take care of the challenges facing the economy. through

regular communication with the market and through open discussions on public policy issues, the central bank has fostered and enhanced the participation of academic and market interests. the bank of thailand ’ s monetary policy - making process was reformed to ensure a balance of transparency, independence and accountability. this is with the belief that transparency of operation limits discretion and leads to accountability. the bank quickly moved towards greater openness in the provision of data and timely economic information. it is our belief that public acceptance and understanding of monetary policy is most important. and this will come about only with greater transparency and predictability. conclusion ladies and gentlemen, in conclusion, i hope that i have given you some updates and direction of where we are heading in this current environment. the experiences of thailand are not significantly different from other countries emerging from a crisis and i therefore welcome any comments and suggestions which you may have. before leaving you today, may i thank you once again for the honour to address this distinguished forum. i would also like to congratulate the organizers, specially the sasin graduate school and the faculty of commerce and accounting of chulalongkorn university for successfully organizing a high profile international conference. our thanks also go to professor carl chiarella, the current president of apfa for his untiring efforts in guiding the apfa activities and a warm welcome the newly elected apfa president, dean professor k. c. chan. i wish you a successful and enjoyable term. thank you for your attention.