bandid nijathaworn : the future of monetary policy remarks by mr bandid nijathaworn, deputy governor of the bank of thailand, at “ south east asia central banks / bank for international settlements ( seacen / bis ) seminar on central bank challenges in emerging market economies in the post - crisis era ”, kota kinabalu, malaysia, 21 january 2010. * * * first, let me thank seacen and the bis for asking me to lead off the discussion on this important topic. for the seacen economies, i think two important questions stand out. the first is what went wrong with monetary policy and what can we learn from it? and the second is what more can we do to improve our understanding of monetary policy so that long - term price stability can be assured while the risk of financial instability is avoided? although the current global financial crisis has been a dramatic experience for central banks, it also offers an opportunity to reassess both the intellectual underpinning and the practical implementation of monetary policy. as we all know, monetary policy in the last fifteen years did cover almost the whole of a global business cycle, starting from the period of the socalled “ great moderation ” when there was a perceived end to economic volatility with interest rates remaining low for an extended period, to the current global financial crisis that saw aggressive use of monetary policy by the major central banks to combat economic contractions with near - zero interest rates and the use of unconventional measures. this reassessment, therefore, is important and will provide a useful starting point for a better deliberation of monetary policy going forward. for this morning, i want to focus my remarks on three issues : first the lessons we can learn from the crisis ; second how to move forward to strengthen monetary policy framework in light of the crisis to ensure long - term price and financial stability ; and third the relevance of inflation - targeting as a monetary policy framework in the post - crisis era. from the crisis, there are a number of important lessons that can be drawn. the first is that monetary policy remains the right instrument to maintain a low inflation environment which is crucial for sustainable growth. but the most important lesson from the crisis is that low and stable inflation alone is not sufficient for ensuring financial stability. this is because the risk to financial stability can come from many sources other than domestic inflation. in the current crisis, it was the housing bubble and excessive risk - taking by the financial institutions that

m r pridiyathorn devakula : financial markets and new financial instruments opening address by mr m r pridiyathorn devakula, governor of the bank of thailand, at the seacen - imf institute course on financial markets and new financial instruments, bangkok, 6 september 2004. * * * dr. subarjo joyosumarto, mr. sunil sharma, distinguished speakers and participants, it is indeed a pleasure for me to be here this afternoon to officially open the seacen - imf institute course on financial markets and new financial instruments. on behalf of the bank of thailand, i would like to extend a warm welcome to everyone of you to bangkok. today ’ s course is the second of three seacen courses that the bank of thailand plans to host this year. we are pleased to be given the opportunity to support the work of the seacen centre, and all its member central banks. these series of courses are indeed most topical, as the global economic recovery gathers momentum, financial market activities also pick up, along with innovative financial practices and instruments. the imf recently adjusted its forecast of global gdp from 4. 6 percent to 4. 9 percent, the highest growth rate in nearly three decades. economic performance in asia has also been in sharp contrast to the situations we faced four or five years ago, reflecting the synchronized recovery of the global economy. with the strong economic recovery comes the demands from firms and enterprises for more sophisticated and efficient services from their financial intermediaries. this is expected to happen in asia as well. the authorities therefore need to be mindful of the inherent risks associated with new financial instruments and practices. to promote growth and financial stability sound macroeconomic and prudential policics are required, as well as vigilance in the supervision and regulation of markets and intermediaries. these include being better prepared to withstand increased volatilities in financial markets and improving the structural resilience of the financial system. as we all know, the cost of financial instability can be grave not only for the country in which thc financial turmoil emerges, bot also for the international financial system as a whole. we saw this in the mexican crisis in 1994 / 95 and again in the asian crisis in 1997 / 98 where international investors ’ confidence was undermined thus imposing significant economic and social costs in all affected countries. the globalisation of markets and the increasing importance of financial stability have prompted central banks to be active and vigilance in