##ing the stability of the euro is the biggest responsibility of the european central bank. the safest currency for all investors is the currency of the country with the lowest inflation rate over time. here, the prospects for the euro are good. over the years, inflation in european core countries has been constantly lower than in the united states, and there is no reason to believe that this would change with the start of emu. it is also very important that the euro will be strengthened by the institutional independence of the european central bank and its objectives of price stability. furthermore, safeguards have been put in place, such as the stability pact, to prevent emu countries from pursuing unhealthy fiscal policies. all in all, i firmly believe that the euro will be a strong currency. 5 as regards the other major determinants of the future importance of the euro - trade and financial markets - the role policy - makers can play is more limited. this is not to say that the euro ’ s starting position is unfavourable. on the contrary, over the last twenty years international private portfolios have been gradually diversified in the direction of european currencies. also, european currencies have been increasingly used as vehicle and, to a lesser extent, as invoicing currencies. there is every reason to believe that these trends could be strengthened by the introduction of the euro. after all, the euro will eventually cover an economy whose gross domestic product is larger than that of the united states. if intra - eu trade is excluded, the eu and the us both account for around 20 percent of world trade. furthermore, with 350 million inhabitants the eu is the largest consumer market in the oecd area, consumers whose needs will partly have to be met by trading with the rest of the world. companies which trade principally with european counterparties may be inclined to invoice and pay in euros. if the euro is going to be widely used in international trade transactions, exporters and importers within the european union will no longer be exposed to exchange rate risks nor have to hedge against such risks. the european business community thus has ample opportunities to reap the benefits provided by the introduction of the euro. 6 it is more difficult to predict the future role of the euro in international financial markets. fortunately, at the european level agreement has been reached on legal provisions that guarantee the continuity of ecu contracts. this provides a good starting point for euro capital markets. ultimately, however,

obsolete quickly and one has to ensure that the domestic system in use is compatible with the international system, as well as the level of security required. but far more important is the financial and legal infrastructure. i will highlight a few, starting with first, the need to clearly define the rights and obligations of card issuers, card users and other parties involved in the transactions particularly in case of frauds. in thailand, we have now drafted the credit card act to set this framework but its enactment is still pending. secondly, the need to set up a good credit information system to help card issuers in their risk management. the minimum is a system that allows the sharing of negative information or some kind of black lists. but one should quickly migrate towards pooling and sharing positive information as well. a well functioning credit information system is not harmful to the consumers. instead it enables the borrowers on the margin to obtain credit, those who would have been refused in its absence. in thailand we already have two credit bureaus operating, and the credit bureau act will soon be enacted to govern their businesses. third, the need to protect the consumers. the charges and expenses levied against them should be made clear and easy to compare between various issuers. interest rates should be declared as effective annual rates and sufficient lead time should be allowed and communicated to consumers before changes in terms and conditions come into effect. in thailand, we are planning to set a uniform standard for the whole industry regarding such things as interest free periods, the setting of due dates and calculation methods for past due balances. finally, if internet transactions become prevalent or poised for rapid growth, there is the need to define its proper legal framework. on this issue, we have just passed the relevant laws and are in the process of drafting the subsidiary regulations at ministerial level. at the micro level, and this is your direct responsibilities, card issuers have to put in place a good system of risk management. this means able to identify what events will pose risk to you, which risks you should take, how they should be monitored and what measures can be employed to mitigate those risks. i must emphasize here that proper risk management simply cannot be done without a sophisticated system to gather process and analyse the information. the last issue i would raise today is that of accounting. card issuers must ensure that they hold adequate and prudent levels of provision against bad debts in their accounts. probability of default should be carefully analysed by various methods