favourable. i also expect investment to play a stronger role as growth driver, in line with the consumption recovery. this will be a welcomed development to promote a more balanced economy. the slower domestic demand has also been mirrored by moderate growth of private credits. nevertheless, the banking system is strong, with the bis ratio of 15 percent at end - july 2007, while net npl amounted to 4. 4 percent of total loans. the return on asset which stood at 1. 3 percent during the first quarter of 2007 fell to 0. 7 percent for the first half of the year, reflecting provision in accordance with ias39, the new accounting standards as you know, to strengthen the capital base. meanwhile, qualitative improvements have resulted from much tighter board of director oversight and accountability, as required by the bank of thailand. on the non - bank side, non - bank credit card companies have been competing more strongly for market shares. to prevent default risks and npl, and to safeguard against the overall financial stability, we have strengthened efforts to communicate to and raise awareness with the general public on this issue. regulatory measures were also put in place to ensure that consumers were protected and well - informed, including the prescription of rules, procedures, and conditions for credit card business, including interests and service fee charges as well as debt collection. turning to macroeconomic stability, latest data for august showed headline inflation at 1. 1 percent and core inflation at 0. 7 percent. on the exchange rate, while the baht movement has reflected largely external developments, there have also been internal drivers, which include large surplus in current and capital accounts. during the first 7 months of this year, the balance of payments recorded a surplus of 5. 9 billion us dollar in total. overall, international reserves rose to over 74 billion us dollar at end - august, close to 3. 6 times of short - term external debt. in the absence of pressure on internal and external stability, monetary policy has become more accommodative. the monetary policy committee cut its policy interest rate in total by 175 basis points since the beginning of this year. the aim is to stimulate domestic demand to offset moderating export growth in light of the slower us economy and baht appreciation. nevertheless, exports would still remain an important driver of growth for next year. and, the latest economic forecast projects the thai economic growth to lie between 4. 5 - 6. 0 per cent in 2008, while core inflation is expected to stay comfortably

needed for long - term economic efficiency, going forward, the appropriate degree of opening or pacing through time will remain an issue for controversial debate. ladies and gentlemen, the third part of my talk today focuses on “ international rules of the game ”. on trade and financial integration, we all have to wait for the resolution of wto negotiations. in the meantime, thailand and asean have made progress on a number of free trade arrangements with japan, china, korea, australia, and new zealand. within asean, more progress on the asean blueprint, which lays out the strategic plan to achieve further trade and financial integration within 2015, is in the pipeline. on this topic, i also like to share with you an observation that asian emerging markets, in general, rely increasingly more on trade integration because it is judged to be a safer mode of risk - sharing with the world. while benefits from trade integration are universally appreciated, net benefits to overall economic development from the international financial integration have not been so apparent in asia. as a result, while the pace of financial integration has far outstripped trade integration in advanced economies, it has only managed to keep pace with trade integration in emerging markets. turning to the financial sector side, nowhere are the international rules of the game closer to my heart than the international standards for banking supervision. early this year, the bank of thailand ’ s capacity and performance in supervising financial institutions has been assessed against international best practices in the context of the joint imf / world bank financial sector assessment program or fsap. this fsap assessment confirmed the strength and capacity of our supervisory process, which have been significantly strengthened over the past decade. moreover, the fsap assessment also strongly supports our goal to ensure that our regulatory and supervisory responses keep pace with the financial intermediaries and the products they offer. in this endeavor, the bank of thailand has put emphasis on robust stress testing, enhanced counterparty risk management, and safe and efficient market infrastructures. our financial and legal infrastructures will continue to be strengthened particularly through the introduction of a number of legislations and amendments. the new deposit insurance act and the financial institutions business act are in the pipeline. specifically, the financial institutions business act will stipulate prompt corrective action and grant the bank of thailand power to conduct supervision on a consolidated basis. in addition, it will also foster supervisory independence and the ability to supervise a broader set of systemically important institutions, including non - banks, as well as provide the