bandid nijathaworn : the role of early warning systems in economic policy formulation speech by mr bandid nijathaworn, deputy governor of the bank of thailand, at the panel discussion on “ the role of early warning systems in economic policy formulation ”, imf high - level seminar “ early warning systems and their role in surveillance ”, singapore, 9 february 2010. * * * first, let me thank the imf for the invitation. at first, when i was asked to speak on this panel, i was not sure why the fund is organizing a high - level seminar in asia on early warning systems, as interest on the topic seems to have faded completely with the recovery of the asian economies from the crisis in early 2000 ’ s. then, it becomes clear that the resurgence of interest on ews, now called ewe or early warning exercises, is very much the mandate of the g20 that requires the imf and the fsb to lead the conduct of such exercises in response to the current crisis. given the severity of the current crisis, i think this initiative is important and needs to be supported. for this afternoon, i want to make three observations on how the new early warning exercises can be made most useful to help sustain global growth and maintain financial stability, especially in light of the lessons learned from the current and past crises. my observations will be on : ( 1 ) the nature of future crises ; ( 2 ) their implications for the role and the conduct of ewe going forward ; and ( 3 ) some suggestions on what should constitute the important components of the ewe process. first, on the nature of future crises. one criticism we often hear about ews in the past is that the system is often good in replicating the last crisis but is less useful in anticipating future crises. this point i believe has been echoed also in today ’ s seminar. a key reason for this is the way the ews models have been calibrated to fit the explanation for the last crisis, and hence, becomes less useful for anticipating future crises when circumstances or the risk factor change. similarly, lessons learned from the previous crisis tend to over - prepare policymakers for a repeat of a similar crisis, thereby leaving them vulnerable to the new cause of the next crisis. therefore, for ewe to be useful, it must have the ability to anticipate the nature of future crises with certain accuracy. this, of course, is going to be a demanding task

as reflected in the world bank ’ s latest logistics performance index. thailand has, therefore, been a natural gateway that links extra - regional economies to asean markets. thailand has advantages to be a hub for regional headquarters of multinational companies ; a hub for logistics and distribution activities ; a sourcing hub for regional markets ; and a financial hub for regional markets. however, to remain competitive as a regional hub is a challenging task. bis central bankers ’ speeches 14. to remain as the preferred hub and entry point of the region, we perceive an opportunity for investment from china which has the advantage in capital, construction capacity and technology. as the advantage of low cost factor of productions is rapidly declining, china is facing an urgent need to re - orient supply chains through thailand to enter asean and the greater mekong subregion ( gms ) in particular. china and thailand should therefore make every effort to grasp this opportunity and construct win - win solutions for both sides. ladies and gentlemen, 15. let me conclude that china economic prosperity and advancement provides wide range of untapped opportunities for thailand. they are right here where we are now, in our region. we should seize it and not miss it. and i am confident that so long as we work hand in hand with china, unite together, and embrace the merit of economic integration, the synergy of the two will surely give its fruit on the growing tree. thank you. bis central bankers ’ speeches