, investors in the stock market closely monitor businesses, and will withdraw funds from those that have low prospects of future growth, moving them to those with better prospects. the growth prospects will be realized, and in aggregate will improve the whole economy ’ s growth potential. a well - developed financial market also lowers the cost of raising funds, as the increased competition broadens the variety of financial products offered. an sme for example, whose credit - worthiness is difficult to assess compared to a corporation, might be limited to self - funding in a less - developed market. but in a well - developed financial market, corporations can turn to other channels, leaving commercial banks more incentive to serve smes. in 2004, financial sector master plan phase 1 was adopted and, to continue improving the financial sector, financial sector master plan phase 2, the current phase, was launched in 2010. this current plan helps promote competition in the financial market. continuity of these plans and implementation over several years has improved thailand ’ s financial infrastructure, as indicated by lower cost - to - income of commercial banks. progress is especially visible in the sme segment. promoting competition among players in the banking sector has steered banks to seek more opportunity in this segment. at the same time, the bank of thailand has helped lay down infrastructure that reduces the asymmetric information problem in this segment by means such as setting up the sme database. with the convincing results of the current plan which will end this year, the bank of thailand has recently set up a steering committee to look after the next phase, financial sector master plan phase 3. in addition to financial sector master plan, the bank of thailand also encourages thai companies and depositors to diversify their investments and promote financial market development through the implementation of capital account liberalization master plan. as a result, there is increase in the number of thai companies doing outward foreign direct investment which allows capital as well as resources to be allocated more efficiently. bis central bankers ’ speeches at this point, it is important to note that resources and infrastructure built by the government and central bank are not sufficient in themselves to lift the economy ’ s growth potential. more importantly, financial institutions and businesses must utilize them and act as the main player that will drive the economy to its highest potential. therefore, cooperation of financial and business sectors is vital for lifting growth potential. the private sector needs to add more value to products and services by having long run commitment and investing in both physical and human capital, for example,

fiscal compact results in handicapped liquidity support efforts on the part of the authorities and heightened market concerns. rising risk premium leads to explosive debt dynamics, loss of market access and rollover difficulty, which in turn leads to even greater liquidity needs. with the cost of rescue mounting, internal country politics may further delay policy leading to a vicious cycle between rising rescue costs and policy inaction. there are signs that these risks are very real. for example, last month in late july, spanish bond yields recently jumped up again over 7 percent, making the country ’ s debt dynamics unstable. there has also been upward pressure on italian bonds. the ecb came to the rescue by promising to “ do whatever it takes to preserve the euro as a stable currency ”. markets stabilized and yields came down. the us stock market also picked up. nevertheless, the risk that yields could erupt again persists, especially if concrete progress in implementing policy does not take place. in the event of a liquidity seizure, there will be considerable spillover into global financial markets. trade will decline amid the credit crunch that will surely follow. asia, thailand included, will not be spared the turmoil. so that ’ s the extreme scenario. now let me go over the baseline scenario. in this scenario, piecemeal policy averts a systemic crisis and leads to a prolonged recovery. in the baseline scenario, progress in implementing policy remains bogged down by internal politics but makes sporadic progress, especially once the possibility of a systemic crisis becomes all too real. this scenario is basically a continuation of the present state of affairs with which you are all familiar. global capital markets are in flux. and global trade slows down. the recovery process is long and drawn out and the authorities eventually make progress on fiscal integration and banking union. so which scenario will be likely? this is the big question mark. there is considerable uncertainty due to the ups and downs of internal politics. but political imperative to maintain the union has always been strong. and a strong union needs a stable common currency and economic growth. once the crisis becomes imminent and threatens the union, authorities will have no choice but to take decisive action to avert a systemic crisis. so those are of my views of how the euro crisis will play out. let us move to the second question : can thailand grow through the euro crisis? yes, long - term sources of growth remain but adjustment pain will be unavoidable. in a globalized world, nobody is immune from