blueprint crystallizes this in its goal of a single market and production base by achieving free flow of goods, services, investment, and skilled labor, and freer flow of capital, while continuing to reach out to the rest of the world. the adoption of aec will have many implications on financial institutions and central bank. in order to make thai banking sector to stay resilience and competitive in the more open market, we need to explore and analyze the impacts of aec on both practitioner and regulator sides. taken from the “ declaration of the asean economic community blueprint ”, 20 november 2007 bis central bankers ’ speeches ladies and gentlemen, i would like to talk firstly about the impacts of aec on financial institutions, and secondly on the role of central bank for small economy like thailand. for financial institutions, the aec can give both opportunities and challenges. obviously, financial institutions will benefit from market expansion and the increasing in cross - border financial and trading activities as well as revenue remittance. however, the aec will induce higher competition and more risk exposure. to maximize benefits and minimize any negative effects, financial institutions need to adjust their business to the changing environment. truly understanding customer demand, business culture, and regulatory requirement of other asean countries are inevitable. in the midst of this process, there are three words that management may need to take into consideration. the keywords are connectivity, innovative, and efficiency. • connectivity : the connection that can reach to customers in the region will be an important criterion to maintain or increase international competitiveness of financial institutions. these can be done through traditional ways of correspondent banking or establishing new networks and presence in other countries. • innovative : financial institutions need to be able to respond quickly and effectively to customer demand, and must not lose sight of the new opportunities from mobile banking and other social network. higher levels of innovation are necessary, while still focusing their attention on their own core competencies. • efficiency : financial institutions need to deliver financial services with high efficiency in terms of cost, quality, and product availability. business processes, strategies, and supporting systems may need to be revised or reconsidered in order to maintain market share and attract new customers. dealing with the above factors is not an easy task. at this moment, information and communication technology is perhaps going to be the most powerful catalyst. as a central bank, the bank of thailand faces the challenge of maintaining stability, encouraging development, and ensuring financial inclusion. all of these roles are

tongurai limpiti : future of thai banking system – the road towards aec keynote address by ms tongurai limpiti, deputy governor for corporate support services and banknote management of the bank of thailand, at the idc financial insights, thailand financial services summit 2012, bangkok, 8 november 2012. * * * good morning, ladies and gentlemen. it is an honor to join all of you today and i would like to thank the idc financial insights for inviting me to deliver a keynote address at this event. the title of my remark today is about “ future of thai banking system : the road towards aec 2015 ”. i think that this issue is appropriate and timely as we are now approaching a new face of regional economic integration, or the asean economic community, which will come into effect in 2015. to be aware of its impacts and to identify company positions and strategy in responding to its impacts would be of a great benefit. i hope that this event will provide a very good opportunity for us to share experiences and views on the way to move forward. with the given time, i will use this opportunity to touch on three topics which are current situation of thai banking system and the new challenges from aec, the impacts of aec on financial institutions, and the role of central bank. ladies and gentlemen, when we talk about thai banking system, i think it can be claimed, now, that we have safe and sound banking sector with sustained profitability, despite the ongoing global financial crisis and severe flood last year. the financial institutions have robust risk management system. the average capital adequacy ratio is highly above the minimum requirement at around 15 %. loans expand in line with economic recovery, while banks increase provision in anticipation of global economy. loan quality also improves as reflected in the reduction in non - performing loan ratio. there is also adequate liquidity in the system. in the second quarter of 2012, the banking system reported net profit of 49 billion baht, increasing 21 % from the last quarter. while we have a stable and strong banking system, there are new challenges coming from the regional integration of the asean economic community in 2015. the aec is not, and has no intention of transforming asean into a european style union. what the aec does aim to do is to “ transform asean into a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy ”. 1 the aec