bank weaknesses. they cannot fail in their oversight and risk managerial duties, just as supervisors cannot fail in their on - site and off - site supervision. in this respect, i am a strong believer that good governance is the corner stone of a stable financial sector. we must create a banking community that does not tolerate imprudent business practices and lax systems and control. these are the sins of the past. thailand, for instance, is carefully fostering a new business culture with the right values. on our part, the bank of thailand has since march 2002 announced guidelines supporting the practice of good corporate governance of banks'board and management to ensure that they look after the interests of their stakeholders in an effective manner. these rules are not ground - breaking ; they are just simple common sense. but we need to communicate clearly to the private sector what our expectations are and what the consequences are if the efforts fail. ladies and gentlemen, the cost of financial restructuring in thailand was, after all, too enormous in figures and too painful in real terms to allow us to continue with our old way. in addition to changing the corporate culture, we are also amending a few key laws to solidify the foundation of our financial infrastructure. the new financial institutions businesses act will empower banking authorities with the necessary power to supervise financial institutions on a consolidated basis and to take appropriate actions against weak banks, with the provisions of prompt corrective actions. the deposit insurance act will support a deposit insurance system to limit the loss of public money and reduce the moral hazard inherent in the current guarantee system. we must ensure that when a bank failure does occur, despite all preventive measures and utmost efforts to prevent it, depositors are taken care of fairly, and the bank's shareholders accept their due share of burdens. moreover, we have drafted the financial sector master plan to foster an efficient, stable, and competitive financial sector, guiding the development of the financial sector over the medium term. all these initiatives were undertaken with the objective of providing the right framework for effective supervision in order to develop a sound and strong banking sector. in this regard, i trust that the discussions in the next two and a half days will be very constructive, providing more insights on these issues, as well as other controversial debates - such as the role of governments and lender of last resort. allow me to say a few words on the substantial progress made by various international bodies in crisis prevention. the imf has taken a leading role, revamp

implemented earlier in the 1990s, when the government formally announced a numerical inflation target. in addition, the reserve bank of new zealand now publishes forecasts for the future path of its shortterm interest rate consistent with achieving its objective. lately, some monetary authorities in emerging - market economies, namely the bank of mexico and the central bank of brazil, have announced both a long - run inflation target as well as an explicit “ glide path ” in the interim toward their respective goals. general issues relating to transparency greater transparency is a welcome development, but i would now like to note some general caveats. i will then address certain more recent specific suggestions to expand openness further, in many instances with explicit application to the federal reserve. first, monetary policy effectiveness must be the top priority. although i have just argued that transparency can indeed enhance the effectiveness of policy as well as a central bank ’ s independence, transparency is not an overriding end in itself. transparency should not determine the goals of monetary policy. directly elected officials should choose monetary policy goals consistent with their view of what will best promote the nation ’ s economic welfare. transparency then should be designed to be consistent with the superceding purpose of meeting the macroeconomic objectives that the legislature or some other elected official has set. second, the organization of the central bank matters for the way transparency is carried out. for example, conveying monetary policy decisions and the central bank ’ s views of the economic outlook depends on whether, at one extreme, a single decisionmaker determines policy or, at the other extreme, an “ individualist ” committee - - that is, with each member taking primary responsibility for his or her vote - - arrives at the decision. on the one hand, if a sole official determines policy, then the rationale for his or her decisions can readily be summarized. on the other hand, summarizing and communicating the opinions of the disparate participants on a committee are inherently more difficult. and one would not want pressure to come to an easily communicated common view to constrain the expression of individual opinions and to work against the diversity of opinion that is the strength of the committee structure. third, assuming that elected officials set the goals for monetary policy, the resulting regime affects how and what central banks communicate. for example, transparency with a currency board is less difficult than with a policy group with dual goals. with the former, the central bank or government merely needs to specify the currency to which local money is inflexi