##s and regulations, should hold different portfolios. in the nbim strategy plan for 2011 – 2013, we stated that we will implement an investment strategy built on the fund ’ s defining characteristics – with strategies that are long - term oriented, scalable, and focused on underlying value. this sentence covers a wide range of interesting questions. all the speakers today will, in fact, offer perspectives on the challenges outlined here. all the prominent scholars who are presenting papers today will analyse some of the aspects of how and why market risk premiums vary. financial regulations and financial frictions are bis central bankers ’ speeches important to our understanding of why risk premiums change over time. a thorough understanding of financial regulations and financial frictions might also be important in identifying unique investor characteristics. axel weber will shed light on the implications of financial sector regulation on the functioning of markets and the pricing of assets. lasse pedersen has provided valuable research on the micro structure of funding markets and how liquidity risks create systemic problems. in particular, he will cover frictions in financial markets. it is quite clear that the government pension fund differs from the average investor in important respects. in addition, we need to understand how variation in risk premiums can be consistent with highly competitive financial markets. why don ’ t all investors buy “ value ” or rebalance? ken froot will talk about rare events and disaster risks, how these events are priced in markets. he will also give insights on individual investor characteristics which give comparative advantages in holding these priced risk premiums. ken french will speak about two ways for an investor to generate excess returns : informational advantages and systematically harvesting risk premiums which the investor has a comparative advantage in holding. both froot and french will mainly talk about average portfolio weights in highly competitive markets. in the last talk today, stan zin will cover how different investors will change asset weights over time. he will also discuss what kind of risks an investor is exposed to through rebalancing and why investors might look at the same risk - reward trade - off differently. all of these exciting papers we will discuss today offer interesting perspectives for academic researchers and practitioners alike. as i argued at the start of my talk here, the challenges facing the management of our fund overlap with the research frontier of financial economics. however, we should not expect final and absolute answers. capm, partly developed by our own jan mossin, represented a huge leap forward in 1966. today it has been replaced by better

obsolete quickly and one has to ensure that the domestic system in use is compatible with the international system, as well as the level of security required. but far more important is the financial and legal infrastructure. i will highlight a few, starting with first, the need to clearly define the rights and obligations of card issuers, card users and other parties involved in the transactions particularly in case of frauds. in thailand, we have now drafted the credit card act to set this framework but its enactment is still pending. secondly, the need to set up a good credit information system to help card issuers in their risk management. the minimum is a system that allows the sharing of negative information or some kind of black lists. but one should quickly migrate towards pooling and sharing positive information as well. a well functioning credit information system is not harmful to the consumers. instead it enables the borrowers on the margin to obtain credit, those who would have been refused in its absence. in thailand we already have two credit bureaus operating, and the credit bureau act will soon be enacted to govern their businesses. third, the need to protect the consumers. the charges and expenses levied against them should be made clear and easy to compare between various issuers. interest rates should be declared as effective annual rates and sufficient lead time should be allowed and communicated to consumers before changes in terms and conditions come into effect. in thailand, we are planning to set a uniform standard for the whole industry regarding such things as interest free periods, the setting of due dates and calculation methods for past due balances. finally, if internet transactions become prevalent or poised for rapid growth, there is the need to define its proper legal framework. on this issue, we have just passed the relevant laws and are in the process of drafting the subsidiary regulations at ministerial level. at the micro level, and this is your direct responsibilities, card issuers have to put in place a good system of risk management. this means able to identify what events will pose risk to you, which risks you should take, how they should be monitored and what measures can be employed to mitigate those risks. i must emphasize here that proper risk management simply cannot be done without a sophisticated system to gather process and analyse the information. the last issue i would raise today is that of accounting. card issuers must ensure that they hold adequate and prudent levels of provision against bad debts in their accounts. probability of default should be carefully analysed by various methods