prasarn trairatvorakul : financing 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, 20 june 2012. * * * excellencies, honorable speakers distinguished guests ; ladies and gentlemen it is an honour to be a part of the greater mekong investment forum and a great pleasure to commemorate the 20 - year anniversary of the asian development bank greater mekong subregion ( gms ) economic cooperation program. i would like to thank the euromoney for inviting me to speak today. the shift in the world ’ s center of gravity towards “ rising asia ” has been widely recognized and well documented. but within the asian region lies the mekong subregion which the adb has been financing and providing technical assistance for more than two decades. today this region is getting much of the world ’ s interest and attention. the rich human and natural resource endowments as well as the complementary diversity of the greater mekong subregion have made it the new frontier of south east asian economic growth. the gms stands among the world ’ s fastest growing areas, registering a 10 - year - average growth of around 8 %, followed by the bric nations at 6. 7 % and sub - sahara africa at 5. 5 %. the global attention and interest on this region means prospects for increasing trade and investment. financial services as we all know are derived demand from the needs of the real economy for trade and investment opportunities. though not taking a driving seat, a financial system that is safe and sound has an important role to support growth and sustainable development. when it comes to finance, three issues come to my mind. first, what should be the strategy for meeting the financing needs of the subregion. second, what role should the thai financial system play as an intermediary and as a member of the gms. third, what are the regulatory and institutional challenges to ensure financial stability and sustainable development. on the first issue of financing, we generally observe that trade and direct investment flows are largely influenced by proximity and endowment. finance, on the other hand, knows no boundary. given the broad - based financing needs of the gms which range from large scale project finance to commercial banking for sme, there is a role for all types of institutions : local, regional and global. for local financial institutions, their knowledge and understanding

these matters, both national parliaments and the european parliament already bear an important responsibility. national parliaments adopt the national government budget and structural reforms. at the same time, the european parliament, as co - legislator, has a key role in the design of an effective and efficient eu governance framework. it needs to consider the cross - border spillovers from national policies, as well as the impact of european policies at national level. the european parliamentary week can play a very useful role here as it allows us to learn from each other ’ s experiences. in fact, there has been no lack of successful reforms in different policy fields across eu countries. let me take a concrete example. in the area of financial services, the completion of the banking union is essential for improving the functioning of emu. looking back at what we have achieved since the crisis, the result is quite impressive. european banking supervision, which marked its fifth anniversary last year, has brought a more uniform approach to how banks are supervised. we have also created a new eu resolution framework, which ensures that banks can fail in an orderly manner and that the cost of bank failures is shifted away from governments and onto the financial sector. thanks to these achievements, the banking union is helping to make european banks safer and sounder and more able to support the european economy. we have made good progress, but we are not done yet. 2 / 3 bis central bankers'speeches on the one hand, we need to complete the banking union by operationalising the common backstop to the single resolution fund and advancing political discussions on banking union ’ s missing third pillar : a european deposit insurance scheme. to complete the banking union reform agenda substantial risk reduction has already been achieved and the process is ongoing and should continue. but further progress also depends on having a more harmonised regulatory framework. this entails, among other things, undertaking a serious effort to harmonise options and national discretions ( onds ), some of which lie in the hands of national legislators, limiting opportunities for regulatory arbitrage, and ensuring a level playing field at european level. this can only be achieved through european legislation and common institutions, which bring national competent authorities closer together. conclusions in conclusion, allow me to use a metaphor. national and european parliaments should be like two runners in a relay race. they are both essential in passing on the baton of legitimacy : in other words, they should cooperate as one team to ensure the legitimacy of the greater sharing of sovereignty that underpins