how the credit facilities that schools extend to parents over the course of a school year enables poor parents stretch their budgets and afford this major investment in their children ’ s future. this also enhances the family capacity for the future. indeed, financial services are making themselves present at every turn for these families. finance is not a luxury, but absolutely a necessity in poor people ’ s lives, just as surely as it is for everyone. that is why when we look at the range of needs, we can focus on the pricing to make it sustainable and enlarge the market. • third, poor kenyans are in fact saving, but they are choosing to hold most of that savings in informal financial devices e. g. rotating group saving and lending. few other studies are able to tell us about money that kenyans are holding in informal financial devices, and one of the great values of the financial diaries is that it gives us this more comprehensive portfolio view especially as regards the mix of savings in banks and durable goods. as you know, the central bank is very concerned about savings. we know that achieving growth as a nation requires that deposits be available for productive investment. we expected that increasing the savings rate here in kenya is about getting our people to save more. but, we also know that this will be enhanced after a particular threshold of income is achieved and surpassed. the financial diaries report suggest that we may need to explore that more. perhaps in addition to saving more, we also need to save differently. in the diaries households, only 9 % of financial assets are being held in the formal financial sector and the balance in the informal segment. the authors of the report also point out that getting this kind of informal to formal shift is going to be difficult when savers want to see their money working. one advantage of the informal financial sector, that is, the non - organised non - institutional sector and in saccos and some mfis is that savings are more visibly deployed among other group members and in one ’ s own self. it is visibly doing a job, and that can be harder to see when returns on savings are low and the investments those savings finance are not immediately visible. i have no easy answer about how kenya ’ s financial sector can address this challenge, but it is an important insight that we need to understand better. how can bis central bankers ’ speeches we show people that their savings in the formal financial sector are in fact working? how can we improve the proportion of saving in

m r pridiyathorn devakula : financial markets and new financial instruments opening address by mr m r pridiyathorn devakula, governor of the bank of thailand, at the seacen - imf institute course on financial markets and new financial instruments, bangkok, 6 september 2004. * * * dr. subarjo joyosumarto, mr. sunil sharma, distinguished speakers and participants, it is indeed a pleasure for me to be here this afternoon to officially open the seacen - imf institute course on financial markets and new financial instruments. on behalf of the bank of thailand, i would like to extend a warm welcome to everyone of you to bangkok. today ’ s course is the second of three seacen courses that the bank of thailand plans to host this year. we are pleased to be given the opportunity to support the work of the seacen centre, and all its member central banks. these series of courses are indeed most topical, as the global economic recovery gathers momentum, financial market activities also pick up, along with innovative financial practices and instruments. the imf recently adjusted its forecast of global gdp from 4. 6 percent to 4. 9 percent, the highest growth rate in nearly three decades. economic performance in asia has also been in sharp contrast to the situations we faced four or five years ago, reflecting the synchronized recovery of the global economy. with the strong economic recovery comes the demands from firms and enterprises for more sophisticated and efficient services from their financial intermediaries. this is expected to happen in asia as well. the authorities therefore need to be mindful of the inherent risks associated with new financial instruments and practices. to promote growth and financial stability sound macroeconomic and prudential policics are required, as well as vigilance in the supervision and regulation of markets and intermediaries. these include being better prepared to withstand increased volatilities in financial markets and improving the structural resilience of the financial system. as we all know, the cost of financial instability can be grave not only for the country in which thc financial turmoil emerges, bot also for the international financial system as a whole. we saw this in the mexican crisis in 1994 / 95 and again in the asian crisis in 1997 / 98 where international investors ’ confidence was undermined thus imposing significant economic and social costs in all affected countries. the globalisation of markets and the increasing importance of financial stability have prompted central banks to be active and vigilance in