of total fdi inflows annually since 2000. ladies and gentlemen, i turn now to the last part of my talk which focuses on the roles and directions of the bank of thailand in fostering economic growth, investment, and financial stability. let me touch on two topics here, namely 1 ) the three new financial legislations that will enhance the transparency and efficiency of central bank responsibilities in safeguarding monetary and financial system stability, and 2 ) the second - phased financial sector master plan. the three new financial legislations, which were passed at the end of 2007, are the new bank of thailand act, the financial institution business act ( fiba ), and the deposit protection agency act. the interconnectedness between these three laws recognizes the importance for central bank in optimizing the synergy in responsibilities for safeguarding concurrently monetary and financial stability. the new bot act empowers the central bank to ensure monetary and financial system stability and enhances its operational efficiency and effectiveness of monetary operations. this is achieved by strengthening the transparency and accountability of the bot ’ s monetary policy process. under the new act, the monetary policy committee will be charged with legal responsibility in the realm of both monetary policy target and exchange rate management policy. the act will also increase the bank ’ s operational independence by making it more difficult to dismiss the bank ’ s governor, requiring a cabinet decision with a clear underlying reason. meanwhile, the financial institutions business act ( fiba ) governs the framework and conduct of financial institution supervision, designed to capture the international best practices of financial institution supervision according to basel core principles ( bcp ). specifically, this law allows the central bank to implement consolidated supervision of financial conglomerates, as their business models evolve, together with prompt corrective actions, macro - prudential measures, and measures to improve consumer protection from unfair practices by some financial institutions and non - banks. finally, the deposit protection agency act will replace the current blanket deposit guarantee in place since 1997. the new system of limited - coverage deposit insurance will be phased in over four years to allow banks and depositors to adjust to the new framework. the establishment of the deposit protection agency should reduce banks ’ moral hazard and introduce more market discipline to the banking sector by putting pressure on banks to improve financial strengths if they want to attract and retain depositors. i now turn to the bank of thailand ’ s financial sector master plan ( fsmp ). you may recall that the implementation of the first master plan started in 2004

. the reduction in the policy rate has been effectively transmitted into lower money market rates as well as lower commercial banks'retail rates. to date, 4 major thai commercial banks have reduced their deposit rates and 3 of them have cut down their lending rates. the downward interest rate path should help improve sentiments and lower the cost of funds, which would support the recovery in domestic demand, particularly, investment. the outlook for the thai economy within the next few years remains positive. the bot's forecasts, having incorporated the aforementioned risks, show that the thai economy should be growing by 4 - 5 percent in 2007 and by 4 - 5. 5 percent in 2008. such growth rates are respectable in light of these challenges. regarding the challenge arising from the volatile global financial market and an appreciation of the baht, thailand, with a relatively small and still shallow financial market like many emerging market economies, is vulnerable to the fast - moving international capital. rapid movements of capital flows can have negative impacts on the export or import sectors, which could pass on the adverse effects to the real sector and financial sector and eventually jeopardizing economic stability. the rapid appreciation of the baht particularly in the last quarter of last year, which proved to be inconsistent with economic fundamentals and much out - of - line with the rest of the region, inevitably forced the bank of thailand to implement a reserve requirement on capital inflows to break the rapid one - way momentum and preserve overall stability after several capital account measures proved unsuccessful. ladies and gentlemen. i would like to reassure you that we have always welcomed genuine foreign capital flows and investors and will continue to do so. the measure implemented in december was not meant to affect genuine investors and this was clear from the beginning. the measure announced on 18th of december clearly stated that capital inflow in the form of foreign direct investment ( fdi ) was exempted from the reserve requirement. and later on, as it turned out that genuine flows were still affected by the measure, we attempted to find an alternative option to alleviate pressure on the baht and adverse effects on productive sectors. to date, the exchange control measure has effectively slowed down the appreciation of the baht. on average, the nominal effective exchange rate in february strengthened by only 0. 5 % relative to january, compared to an appreciation of 1. 7 % between november 2006 and the first half of december – before the measure was implemented. after we have successfully slowed down the one - way appreciation momentum, we have