##ness of the world economy, volatility and short - term fickleness of marketplace are unavoidable. the wise thing to do is to understand the nature of this global interconnectedness, enhance risk management at both the macro and micro levels to mitigate negative impact that it may bring upon, all the while maximizing opportunities that it can immensely provide. it is conceivable that, in this highly integrated world, information and confidence are very important in influencing actions. just as how “ shifts in beliefs ” can go a long way to create extreme market reactions and volatility, on a positive side i trust that a successful “ anchoring of confidence ” in our “ shared beliefs ” of asean ’ s strength and future will encourage actions and commitments that will bring sustained prosperity for all. thank you. and happy birthday to the nation. bis central bankers ’ speeches

prasarn trairatvorakul : asian and thai economies in a volatile world speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the nation ’ s 43rd anniversary international conference, bangkok, 19 july 2013. * * * distinguished ceo and chairman, members of asia news network, distinguished guests ; ladies and gentlemen, it is a delight to address you on this auspicious occasion of the nation ’ s 43rd anniversary. let me congratulate you warmly, and wish you many flourishing years ahead. we gather here at an important juncture of what seems to be yet another shift in global economic and financial landscape. the three - speed world economy appears to be on a convergence course recently as china and some other emerging markets start to show signs of slowdown, while the us and japan are gathering momentum. these changing global dynamics coinciding with market ’ s enthusiastic reactions to federal reserve ’ s signal of socalled “ qe tapering ” led to a sell - off of emerging market debt and equities, and reversal of foreign capital flows that had rushed into the region earlier this year. living in a more volatile world the financial world has indeed become more volatile. many factors intertwine to render such great financial market volatility we observe today. these include ( 1 ) closer integration of global economy through stronger trade and financial linkages, ( 2 ) increasingly large and mobile capital flows due to lower costs on cross - border investments, ( 3 ) rapid spread of information made possible by advancement in technology, and ( 4 ) more pronounced reactions on the part of market participants in times of heightened uncertainties ever since the onset of the global financial crisis. the interplay between market players ’ expectations, their self - fulfilling nature and spillover effects paves the way for market exuberance in response to a trigger event. as a clear case in point, the recent ups and downs of financial markets upon new information the market perceives from each round of the fed ’ s announcements highlight the role of “ shifts in beliefs ” on market volatility. what made the post - 2008 period particularly vulnerable to such self - fulfilling global turmoil is the current stage of the world economy characterized by lingering structural weaknesses of the crisis countries and limited policy space that reduce the potential of macroeconomic stabilization policy. all of these factors reinforce the role of global shocks and contagion through real linkages as well as expectation channel in transmitting volati