prasarn trairatvorakul : financing tomorrow – the greater mekong subregion keynote address by dr prasarn trairatvorakul, governor of the bank of thailand, at the euromoney greater mekong subregion investment forum, bangkok, 13 june 2013. * * * excellencies, honorable speakers, distinguished guests, ladies and gentlemen, 1. it is a great pleasure to be here at the euromoney greater mekong subregion ( gms ) investment forum once again and an honour to give some remarks on the topic of ‘ financing tomorrow : the gms ’. a year ago, i had the opportunity to talk about this topic once. at that time, i shared my thoughts on the roles of thai financial intermediaries as a ‘ connector ’ bridging between global financial players and small local institutions. 2. this year, we are gathered during a time when the gms is undergoing tremendous economic reforms. member countries are transitioning towards higher degrees of openness and are integrating with the global economic mainstreams. the gms economies have grown at some of the fastest rates in the world since the early 1990s, averaging close to 8 %, despite the gloom of the recent global financial crisis. this transformation has contributed to economic convergence and narrowed the development divide within the region. the gap of income differences between the gms and the rest of asian countries in their neighbourhood has been reduced continuously. 3. with the promising economic potentials ahead of us, i would like to reemphasize our shared vision of “ what we shall expect to see for the future of the greater mekong subregion ” and “ how we can achieve such prosperity. ” 4. i picture the greater mekong subregion ( gms ) in the next twenty years as a much more connected and integrated region : a region where we are not only connected solely by a river, but by various modes of transportation, where one can travel conveniently, where trade and investment can flow across efficiently, and where prosperity can be widely enjoyed even by those in the rural areas. although we are not yet there, i strongly believe that this vision can come true. 5. we always hear the saying “ rome was not built in a day ”. thus, we have to start working together towards our shared vision starting today. there is a great deal of preparatory work to be done ; but in my view, some of the most crucial tasks are infrastructure development and businesses access

left idle. this is usually referred to as providing the economy with a nominal anchor. when households and enterprises can base their economic decisions on low and stable inflation, this provides an important foundation for higher activity and welfare over time. as long as there is confidence that inflation will remain low and stable, monetary policy can contribute to smoothing fluctuations in output and employment. when the economy is exposed to shocks, such as a financial crisis or a fall in oil prices, monetary policy can respond rapidly. sufficiently flexible inflation targeting could help ensure that lower employment levels do not persist over the long term following a downturn. this can reduce the risk of unemployment becoming entrenched at a high level. the probability of a pronounced downturn in the economy has been shown to increase after periods of rapid asset price inflation and debt growth. monetary policy can also to some extent contribute to high and stable output and employment by giving weight to counteracting the buildup of financial imbalances. however, monetary policy must not be overburdened. if norges bank pursues objectives it does not have the instruments to fulfil, confidence in monetary policy may be eroded. the regulation and supervision of financial institutions must be the primary means of addressing shocks to the financial system. employment levels over time are determined by structural conditions, such as the functioning of the labour market, the tax and social security system and the wage formation process. in norway, a well - functioning wage formation process has enabled unemployment to remain low while wage growth has remained moderate. the new regulation underpins norges bank ’ s flexible approach to inflation targeting. in the conduct of monetary policy, substantial weight will continue to be given to the real economy. in this context, whether the inflation target is 2. 5 percent or 2 percent is less important. at 2 percent, the inflation target is now at the same level as that of most of norway ’ s trading partners. the reduction of the target will not in itself significantly affect the short - term interest rate outlook. never before have global interest rates been as low for such a long period. growth abroad has now picked up, and there are prospects of a gradual interest rate increase among norway ’ s 3 / 4 bis central bankers'speeches trading partners. the outlook is also brighter in norway. in the two years since the cyclical trough was reached, growth has gained a firm footing and the unemployment rate has declined. the outlook suggests that it will soon be appropriate to raise the key policy rate – and