by the lenders themselves. we have also come across instances where arcs have warehoused the stressed assets, while the originator has continued to remain responsible for the collection as well as custody of the security provided by the borrower. arcs may like to introspect whether they would like them to be a warehousing agency for a fee, which is certainly not in consonance with the underlying intent of the framework. independence of assurance functions boards should accord due importance to assurance functions, namely, risk management, compliance and internal audit. these functions play a critical role in identifying and mitigating risks, ensuring compliance with laws and regulations as well as safeguarding the organization's reputation. boards should ensure that heads of assurance functions are positioned appropriately within the organizational hierarchy and granted direct access to the board. dual - hatting, or combining assurance responsibilities with operational or management duties, undermines the independence and objectivity of assurance functions by creating conflicts of interest. therefore, any dual hatting of assurance functions, should be avoided. 3 / 4 bis - central bankers'speeches during the course of our onsite examinations, it was observed that there is very little appreciation of these requirements. the assurance functions are manned by junior level personnel and at times even left vacant! there is very little training and exposure to industry best standards. consequently, they are often not able to stand up to senior management or report to the board. another area that is receiving closer scrutiny and attention of supervisors is the process followed for disposal of assets. at times, the proposals are not even placed before the independent advisory committee, contrary to regulatory instructions. assets are sold to group entities without following the arms length principle and without subjecting them to scrutiny under related party transactions. another surprising behaviour is the'swiss challenge ', which often goes unchallenged! this has become a routine affair giving rise to a suspicion that there may be some implicit understanding among the various participants. it will not be out of place if i mention here that such happenings are necessitating the supervisors to lift the veil and examine the transactions more closely. conclusion in conclusion, i would like to emphasise that the arcs'potential for resolving stressed assets within the system can only be realised with sound governance and adherence to ethical practices by a responsible ownership and a professional management. the boards of arcs should ensure that they do the right thing without needing the regulator to point it out to them. with strong governance, arcs can not only recover but also

on par with international standards. • lastly, the airlines have been encouraged to leverage on investments in specialized facilities in other countries in the region to lower costs, for instance, by using common aircraft maintenance centers and pilot training facilities. this combination of the right business model and appropriate policy supports has yielded tangible benefits to the region. a stronger regional airline network brings in higher competition, lower costs and better service quality, thus improving people ’ s livelihood and paving way for other types of businesses to benefit and grow. ladies and gentlemen, the bigger question is how to replicate the low - cost airlines ’ success story in other service industries in the region, where large rooms for improvement have yet to be addressed and a lot of potentials to be unlocked. among others, the finance industry is one with many untapped opportunities. currently, a wide group of people in our countries still needs a better access to finance and there are still lots of demand for financial services to be met – be they savings, loans, insurance products, or payment services for both domestic and crossborder transactions. by applying the airline industry ’ experiences for policymakers, let me lay out five key conditions necessary to developing domestic financial systems and nurturing financial connectivity in the clmvt in the periods ahead. analogous to the “ open sky policy ”, the first factor is to promote domestic financial liberalization policy and a well - integrated regional financial system. the financial liberalization policy should aim to lessen the degree of domestic financial repression, thereby strengthening financial institutions ’ performance, and broadening their offer of financial bis central bankers ’ speeches products and services. this can be done along with the policy to enhance financial connectivity by promoting the presence of capable players with regional focus. under our mandate, the bank of thailand aims to promote financial connectivity through more connected banking networks and more integrated payment systems. under the asean banking integration framework, countries in the clmvt should gear up efforts to strengthen regional banking networks, which will serve a diverse range of businesses and local people to gain more access to high quality banking services at fair prices. i am glad to see that several banks in our region have already spread their wings to establish representative offices, branches and subsidiaries in neighboring countries. last month, the thai financial system had an opportunity to welcome a new representative office of kanbawza bank from myanmar. the second factor is for our countries to make enough investment in necessary financial infrastructure. having adequate infrastructure, including a backbone payment system, a digital network