fundamentals remain sound with economic stability intact. last year, monetary policy in thailand was focused on limiting the second round effects of the oil price increase on inflation. that focus i think was well met. policy rate has been held steady from midyear last year, and since then, inflation pressure looks to be moderating. latest data show a further consolidation of inflation in december. so, under the current softening trend, baring no surprises on the oil price, there is also a possibility that, in thailand too, inflation could be less of a policy concern this year. under this scenario, therefore, there could be greater room for monetary policy to aim for a balance between growth and inflation. i noted earlier that, to ensure continued momentum of expansion, what we need to see in thailand this year is a stronger turnaround in domestic demand, especially in private sector investment. this is, in a way, the most important must - have macro development for thailand this year. financial environment supporting private sector investment, i think, is very positive and conducive this year, with lower oil prices, easing domestic inflation, ample liquidity, and a more stable interest rate environment. but to substantially lift investment, what we need to see in thailand is a continued improvement in business sentiment and confidence. here, therefore, lies an important issue for policy. on this, i am quite confident that the ongoing efforts by the government to promote growth with stability will successfully lead to continued improvements in business sentiment and confidence, which will be positive for our investment going forward. i want to end my brief remarks this morning with a few year for our domestic banks and financial firms as they continue to support the economy while preparing for a number of important regulatory changes that are set to take place this year. beginning this month, basel ii will be launched in the g7 economies. for thailand, this means we will have less than two years to prepare for our own eventual adoption of basel ii, which has been slated for end 2008. at this time, most banks in thailand have already decided on using the standardized approach for the calculation of minimum capital. and to prepare for basel ii, we will be asking our banks to begin reporting their capital under the new standardized approach from the third quarter of this year onwards, in parallel with the usual calculation under basel i. this, i think, will be an important exercise for our banks before we formally begin basel ii at the end of next year. this year will also see financial

meets international standards. the bank of thailand has made substantial progress on the latter point. we have encouraged banks to become more transparent in providing the public with more timely and transparent information on bank management, especially information relating to non - performing loans, lending to related parties, and violation of the bank of thailand ’ s regulations as well as the fines incurred. in addition, we have encouraged banks to give greater importance to and abide by the best principles of corporate governance by limiting the number of outside directorships which the bank directors or bank senior executives may hold to not more than three, as well as not being an authorised director. before the announcement made on this issue by the bank of thailand on 17 september 1999, there were a total of 82 bank directors holding more than 3 outside directorships. the number has now reduced to 22, and should be finally phased out. to reduce the risk of economic bubbles and the consequence to financial institutions, the bank of thailand plans to reduce the reliance of the private sector on bank credits, from a share of 77 % of the total sources of funds, presently, to 55 % in the next 10 years. this requires that thailand must have strong markets for debt instruments and equities. thus, the development of the bond market is among the major tasks the bank of thailand has undertaken during the year, as it will provide the infrastructure for the conduct of monetary policy through open market operation, as well as enhancing the country ’ s long - term economic development. during the course of this year, more than b200 billion worth of corporate debentures were issued by private corporations and state enterprises, some of which have a maturity of up to 20 years. the issuance of such debentures has helped reduce the cost in mobilising long - term capital. in developing the bond primary market, in co - operation with the ministry of finance, benchmark interest rates were finally set up. in developing a secondary market, the bank of thailand has changed the status of bank counterparties to the primary dealers in june 2000. this was in order to facilitate the implementation of monetary policy, to provide liquidity in the secondary market and to participate in the bidding of government and state enterprise bonds in the primary market, as well as to undertake non - competitive bidding. moreover, when any bonds are in high demand, there will be an issuance of the bonds to ensure adequate liquidity in the market. in addition, by the end of next year, the bank of thailand