key global financial markets, risk linked to activities of the internationally - important financial institutions, and the economic conditions and policies of the systemically - important economies. these are the areas of risk that have global - wide implications but are not being monitored sufficiently relative to their importance. third, the focus of the ewe at the country - level also needs to expand beyond detecting and avoiding local macro - misalignments, and to include assessment of the resiliency and robustness of the domestic economy and financial system to withstand large external shocks. the key point here is that, even with good policies, crisis can happen to an economy if the externally - induced factors overwhelm the abilities and the robustness of the domestic economy to cope with. and forth, the value of early warning is that warning leads to the needed actions being taken in advance. this means the ewe process should serve to facilitate actions to deal with the important risk and issues by the relevant parties. to serve this end, credibility and effectiveness of the ewe depends on appropriate degree of transparency of the structural models and its appropriateness to the context, whether national or markets, as much as its track record. in closing, let me summarize my points in the form of suggestions for the current efforts on the ewe. first, the focus of ewe should expand beyond detecting misalignments to include assessing vulnerabilities and robustness of the global markets, system, and institutions. second, ewe should be a two - level process. the global level process focuses on the systemically important markets, institutions, and economies. at this level, the fsb can play a role in ensuring consistent implementation of regulatory standards, as well as undertaking stress - testing to check the robustness and the resilience of the key markets, institutions, and system. likewise, ewe at the country - level, which can be a part of the normal article iv cycle, should have an additional focus on stress - testing the resiliency of the economy and domestic financial system to large external shocks. the shock scenario can be a common set of assumptions provided by the imf for all countries and draws on ewe findings at the global level. this will provide a good connection between the perceived global systemic risk and the abilities of the individual economies to handle them. lastly, ewe must be part of a global policy process, in that information of ewe must be used and if needed leads to timely policy action.

bandid nijathaworn : the role of early warning systems in economic policy formulation speech by mr bandid nijathaworn, deputy governor of the bank of thailand, at the panel discussion on “ the role of early warning systems in economic policy formulation ”, imf high - level seminar “ early warning systems and their role in surveillance ”, singapore, 9 february 2010. * * * first, let me thank the imf for the invitation. at first, when i was asked to speak on this panel, i was not sure why the fund is organizing a high - level seminar in asia on early warning systems, as interest on the topic seems to have faded completely with the recovery of the asian economies from the crisis in early 2000 ’ s. then, it becomes clear that the resurgence of interest on ews, now called ewe or early warning exercises, is very much the mandate of the g20 that requires the imf and the fsb to lead the conduct of such exercises in response to the current crisis. given the severity of the current crisis, i think this initiative is important and needs to be supported. for this afternoon, i want to make three observations on how the new early warning exercises can be made most useful to help sustain global growth and maintain financial stability, especially in light of the lessons learned from the current and past crises. my observations will be on : ( 1 ) the nature of future crises ; ( 2 ) their implications for the role and the conduct of ewe going forward ; and ( 3 ) some suggestions on what should constitute the important components of the ewe process. first, on the nature of future crises. one criticism we often hear about ews in the past is that the system is often good in replicating the last crisis but is less useful in anticipating future crises. this point i believe has been echoed also in today ’ s seminar. a key reason for this is the way the ews models have been calibrated to fit the explanation for the last crisis, and hence, becomes less useful for anticipating future crises when circumstances or the risk factor change. similarly, lessons learned from the previous crisis tend to over - prepare policymakers for a repeat of a similar crisis, thereby leaving them vulnerable to the new cause of the next crisis. therefore, for ewe to be useful, it must have the ability to anticipate the nature of future crises with certain accuracy. this, of course, is going to be a demanding task