several members of our region – attest to the capacity for policymakers to respond in a pragmatic and timely rather than strictly rules - based and sequential manner. 6. in this connection, the fund ’ s framework for managing inflows should serve only as an empirical study on country experiences in using capital flow management measures. it should not become an obligation for member countries as was the case with the 2007 decision on exchange rate surveillance ; otherwise the fund will risk straining its relations with the membership. we also note that the above framework is part of a broader reform agenda on capital flows, which would entail examining both push and pull factors, as well as both source and recipient dimensions of flows. moreover, the longer - term solution to managing capital inflows lies in developing deeper and broader financial markets, which would enhance absorptive capacity and facilitate efficient use of capital. we therefore call on the fund to further study this aspect to help members develop their capital markets. 7. we thank the fund for its analytical work on assessing reserve adequacy, but we would like to stress that reserve holdings are not an economic policy goal, nor are they driven primarily by precautionary self - insurance motives, but are the outcome of a larger policy strategy for macroeconomic and financial stability. thus, we view that the fund ’ s emphasis on assessing reserve adequacy might be misplaced and would add little value to policy dialogue in the fund ’ s surveillance process, the focus of which should be on the broader macro - policy mix in relation to economic policy objectives. moreover, assessing reserve adequacy remains an inexact science, with theoretical underpinnings yet to be concretely established. the fund ’ s recent exercise may therefore be best viewed as an addition to ongoing research on this issue, which would help clarify expectations about what the new metric can and cannot achieve. 8. the fund cannot hope to establish confidence in the ims without building adequate financial safety nets to ensure the necessary backstops in the event of global systemic crises. we therefore call on the fund to strengthen its financing toolkit, including the possible inclusion of a short - term liquidity line, taking into account reinforcing relationships with fund facilities and other regional financing arrangements. 9. over the long term, the eventual choice of a global reserve currency, or currencies, needs to reflect evolving international trade and investment flows and be widely accepted by the market. in this regard, we see

policy goals of banks, while corporate governance guidance and notifications under the fit - and - proper rule for the appointment of bank management have been put in place. financial institutions have been positive in embracing these changes, as they contribute to a more open, more accountable, and more transparent financial system. given the dynamic changes in the financial system, it is important for risk management and supervision to be forward - looking, and recognize margins of error from risk models. thus, it is sensible to adopt the conservative approach. here, let me also highlight the importance of “ stress - testing ” as a risk management and supervisory tool. during the past four years, we have conducted stress - testing, both top - down and bottom - up by requiring local banks to do the same, for risk management and capital planning purposes. currently, stress - testing has become an integral part of our supervisory process. from the experience so far, we find stress - testing to be an extremely useful process and dialogue for identifying potential weaknesses of banks in a forward - looking manner, as well as in alerting bank management to take the necessary corrective actions. as a result of the macro - prudential framework implemented and the emphasis of supervision that has been placed on improving risk management of banks, thai financial institutions, so far, have remained resilient to impact of the global financial turmoil. i believe this is a common experience here in seacen. ladies and gentlemen. looking ahead, once the global economic and financial system recovers, many important issues will require answers on how to move forward from the point of view of regulatory guidance. on this, the key issues that will be most relevant to our region in my view will include : first, large capital inflows and their implications for risk management capacity of the financial system ; second, the issue of procyclicality and how to deal with it effectively in the context of bank regulation and supervision, and third, managing the cross - border spillover effects that potentially can be a source of systemic risk. first, on the issue of capital flows. at this time, given better growth prospects for emerging markets in the near - term, there could be a resurgence of strong capital flows to emerging markets once the current global crisis subsides. as large capital inflows are known to be one of the key contributing factors of many financial crises in the past, preparing the economic and financial system to effectively intermediate it and manage the associated risk to maintain financial stability, will