in the local bond market. the first is greater market liquidity which has allowed the bond market to adjust to the change in monetary policy without difficulties. and the second is the improved communication between policymakers and market participants, which has allowed the bond market to form its own expectations about policy direction and to respond accordingly. these two qualities, in my view, are positive for the development of the bond market in the longer - term. outlook and developments in the bond market this year the thai economy will continue to expand, driven by momentums in domestic demand and export, including the launching of new infrastructural projects. higher investment will imply higher funding requirement. given ample liquidity in the system, funding investment expansion domestically should be a preferred option to funding it from abroad. domestic funding will help make the domestic credit market competitive while helping to avoid the unnecessary pick - up in external debt. it is in this context of domestic resource mobilization that the bond market can have an important role to play. this is to say that while bank credit will continue to be a major intermediary for investment finance, the need for long - term investment financing will offer considerable opportunity for the bond market. on the supply side, the fixed income market can be an important channel for long - term capital mobilization, while on the demand side, there will be ample demand to invest in fixed income instruments from domestic institutional investors. it is in this context that the current efforts to develop the domestic bond market by the government are timely, and this priority now ranks high on the government's agenda. roles of the bank of thailand in developing the bond market a high - level domestic bond market development steering committee was set up by the government in january this year. the committee is chaired by the finance minister and comprises high - level representatives from both the public and private sectors, including the bank of thailand. the aim of the committee is to promote the development of the domestic bond market in five key areas, namely, ( 1 ) the primary market ( 2 ) the secondary market ( 3 ) taxes ( 4 ) market infrastructure and ( 5 ) market information. as for the bank of thailand, we have been tasked with the responsibility to develop an active secondary market. to meet this challenge, the bank of thailand has mapped out a multi - year strategy from which our work plan for bond market development this year will focus on six areas. first is the development of the private repo market. the repo market will provide bond market

prasarn trairatvorakul : bank of thailand ’ s policy direction in 2012 speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the bank of thailand, bangkok, 27 january 2012. * * * good afternoon, honorable guests and members of the press, 2012 is a special year because it is the bank of thailand ’ s ( bot ) 70th anniversary, a mark of extensive experience for an institution. faced with numerous challenges to monetary policy and financial institutions policy implementation, the bot has through the past 70 years upheld the institutional value that our policies must be based on sound principles, yet embracing enough flexibility to accommodate the changing environment. our ultimate goal is to promote thailand ’ s long - term economic and financial stability. our policy direction in 2012 will continue to reaffirm our long - held determination to strengthen the country ’ s economic resiliency and the well - being of the thai people. notwithstanding short - term economic obstacles that have weighed on current sentiments, the thai economy ’ s main challenge has remained the same since my address last year. this major challenge is how we all can become more proactive since idleness during a time of rising competition could easily cause us to fall behind. as such, all parties should always be ready to improve oneself and to prepare for uncertainties that may occur in the future. in this same spirit, the bot has modified our strategy to fit the changing environment and is willing to work with all parties to ensure that the thai economy can continually expand in line with its potential. policy implementation in 2011 looking back at 2011, the bot implemented our monetary policy to ensure stability against the backdrop of robust economic expansion in the first three quarters of the year. thus, we continued to normalize the policy rate, as i had stated in last year ’ s policy statement. after the economy was hit hard by the flood crisis amid the stagnating global economy in the final quarter, the bot policy was adapted to the changing circumstances, evidenced by the monetary policy committee ’ s ( mpc ) decision to lower the policy rate in the last meeting of the year. throughout last year, the bot also paid particular attention to policies that facilitate businesses in normal times and in crisis times. these included policies that ensure the exchange rate movements consistent with the underlying economic fundamentals and that its volatility remained manageable by thai businesses. moreover, our policy on financial sector regulation and supervision has ensured that thai financial institutions maintain