phased financial sector master plan. as of end june 2008, net npl of the banking sector in relation to its total credit is 3. 4 percent, not a terribly high level. in addition, since the potential losses of these npls have already been provided for according to ias39, the international accounting standard, the financial implication of npls on the banking sector ’ s financial standing is very small. however, reducing npls further should improve the banking sector ’ s credit rating. the master plan will also focus on improving competition and efficiency of banks, while also broadening financial access to a bigger base of clientele. after the industry - hearing, we will announce the fsmp so that market players have a clear picture of the banking sector going forward. on the pursuit of price stability, i wish to emphasize two points : first, most central banks, both inflation targeter and non - inflation targeter, have their main objective on price stability, which is well - accepted as a necessary condition for sustainable growth. studies show that “ too loose ” monetary policy for “ too long ” could potentially fuel severe inflation and fail us in the pursuit of long - term growth. more importantly, it will take a bitter - than - necessary pill to bring down inflation once its expectation persists. as an inflation targeter, therefore, it is important that central bank can anchor inflation expectations such that everyone believes that central bank will not tolerate high inflation which, in the long run, can undermine economic growth. in thailand ’ s case, our studies have confirmed that during the first half of 2008, actual growth is close to potential growth, which could add on to inflationary pressure, with the real policy rate becoming mostly negative in july 2008. moreover, another piece of central bank research also points out that thailand ’ s inflation dynamics has exhibited greater persistence. in part, this has been because food and fuel prices, though are cost - push factors, change as a result of structural shifts in supply and or demand. these are the rationale for the monetary policy committee to raise the policy rates by a total of 50 basis points during the past two meetings in order to gradually withdraw the demand stimulus. second, monetary policy aims to create a conducive environment for consumption and investment decisions. through price stability and efficient allocation of resources and finance, the economy will be able to achieve its potential growth. in this regard, it is crucial to establish an understanding between the central bank and the government of the

an agency well - versed in resolving depository institutions under the federal deposit insurance act ( fdi act ) and working with other domestic and international authorities. ola empowers the fdic to step into the shoes of the failing institution to resolve a “ financial company ” at the corporate group level. the fdic must ensure that responsible managers and directors are removed, and the fdic or federal reserve board may seek certain industry bans for culpable directors and senior executives. ola also includes the olf. congress recognized that the ability of the fdic to borrow funds from the treasury department to provide emergency liquidity to a failing systemically important institution is crucial to the success of its resolution. the olf is not prefunded, and the fdic ’ s capacity to borrow to fund the olf is capped at 90 percent of the fair value of the assets of the institution that are available for repayment. the provision of olf liquidity does not fall ultimately on the american taxpayer. shareholders may not recover until the olf is repaid. the fdic is authorized to assess financial sector participants if necessary to repay the funds advanced by the treasury to fund the olf. reevaluate, but don ’ t forget the disorder of the crisis the breadth of changes that have been made to the regulatory landscape since the onset of the financial crisis is huge. given the scale of the changes, it is entirely appropriate to take stock of these changes and reevaluate their effectiveness. it is not surprising to think that some recalibration might be necessary. it is also worth considering what additional reforms are needed to make the financial system more resilient and resistant to future, unanticipated shocks. sometimes i get asked the question of whether the financial sector is where it needs to be in terms of resilience. my answer is usually that things are better, but they can get even better still. and i suspect that, in even the best case scenario, that will always be my answer. because threats and risks evolve. financial institutions, and regulators for that matter, must recognize changing risks and ensure that their approaches evolve in kind. we need to ensure that when the next economic downturn occurs, the financial system will bend, but not break. of course, increased resilience does not come without costs. it is important to continually reassess whether those costs are appropriately balanced with the evolving risks. there are a number of potential areas