particular attention, notwithstanding the current regime applied. the presentations on this issue by ms. m. peeters yesterday and by the experiences of various countries during today ’ s panel of the conference were very useful. fiscal domination remains a constant risk to price stability, as it came out of the experience presented here by mr. baschi ( turkey ). we hope that the commitment of the government for developing a better coordination of monetary and fiscal policies will continue in the future, as the minister of finance, mr. malaj stated in his speech. this idea was further elaborated on in the presentation authored by mr. hida and mr. haderi. dollarisation or fx may constitute another obstacle that places financial stability and monetary policy independence at risk, as argued by mr. driessen. therefore, it is a problem that needs attention. what inflation rate should be targeted remains a subject of debate. this concern was presented by mr. olters. the bank of albania is closely addressing this issue in a very prudential manner, so that it does not become an obstacle for economic growth. in light of the above difficulties for passing to a new regime, as stressed by mr. mayes, it is important to implement a robust strategy so as to avoid large mistakes. price stability, as stressed some times during the conference, helps economic growth. on the other hand, the second pillar of the bank of albania, the financial stability, is likely to play a more important role for economic extension. but, as mr. blejer stressed in his speech, stability should not be turned into an end in itself. a good regulated but undeveloped financial sector may be as ineffective as a deregulated sector. in order to make the basic policies in economy more harmonized and effective, i would emphasize that the banking system and the other financial institutions of the country should be more effective, open and supervised. in the final analysis, it is very important to create a real financial market, where all actors know the rules of game and obey them fairly, as it came out in the presentations of mr. niedermayer, mr. danielson, mr. pencapligil and mr. bunda. in conclusion, i would underline that the challenges ahead of us, on our way to development and integration, become easier when a spirit of cooperation exists not only within the country but also in the regional framework and broader. thanking you for your participation in this conference, i declare it closed.

the bank of thailand remains alert, and retains sufficient policy space to act if and when necessary. the third key challenge is that of a recent surge of capital inflows, whose causes are both domestic and global in their origin. on the one hand, the relatively robust growth momentum in thailand has been a “ pull ” factor, attracting portfolio inflows from those seeking to benefit from better economic prospects. at the same time, the low interest rate environment and subdued growth in major economies have helped “ push ” investors to search for higher risk - adjusted returns elsewhere, particularly in emerging economies including thailand. the exchange rates of these recipient economies have appreciated as a result, leading to concerns in some quarters about the prospect of growth momentum. in thailand, some have called on the mpc to lower the policy interest rate to ease the pressure on the baht. a few have gone further to question the suitability of inflation targeting regime for thailand. ladies and gentlemen, there is little disagreement about the pertinence of capital flows for macroeconomic outlook and stability. where my view may depart from that of some critics, is in regards to appropriate policy response, and what objectives the bank of thailand can and should pursue. the mpc ’ s core objective, as instituted by law and in agreement with the government, is to achieve maximum sustainable growth, in the context of stable prices and sound financial system. under this mandate, capital flows and exchange rate fluctuations are not the targets in and of themselves, but enter the policy calculations through their effects on the overall macroeconomic outlook. the mpc ’ s recent decisions to keep the policy interest rate unchanged can be rationalized in this light. while all members of the mpc may recognize the risks posed by volatile capital flows, the majority believed that the overall macroeconomic conditions are consistent with the mandate, and no change in policy was warranted. thus, the current policy framework is sufficiently flexible to allow the bank of thailand to address the issue of capital flows. by contrast, if policy interest rate were employed to target capital flows and exchange rate per se, the outcome would likely prove counter - productive in my view. uncertainty about the effectiveness of such policy use aside, the central bank ’ s commitment to safeguard the overall macroeconomic stability may also be called into question by the public, with potentially serious consequences. i would like to also point out that a couple of mitigating factors are currently at play, which can help alleviate the adverse impact of capital flow surge.