possible to pursue an independent monetary policy on a sustained basis. eventually, current - account disequilibria and changes in reserves will provoke an attack on the exchange rate. the enormous increase in capital flows has been accompanied by abrupt reversals of these flows. whereas the logic of the thesis of the impossible trinity suggests that exchange - rate attacks typically originate in response to current - account disequilibria and build up gradually, in fact, recent speculative attacks have often originated in the capital account, have been sudden and difficult to predict, and have included the currencies of countries without substantial current - account imbalances. capital - flow reversals have involved a progression of speculative attacks, mostly against pegged - exchange - rate arrangements. these reversals of capital inflows and resulting exchange - rate devaluations or depreciations have often been accompanied by sharp contractions in economic activity and have, at times, entailed “ twin crises ” - crises in both the foreign - exchange market and the banking system. finally, there has been a tendency of instability in foreign - exchange markets to be transmitted from one pegged - exchange - rate regime to others in a process that has come to be known as “ contagion ”. the victims of contagion have seemingly included innocent bystanders - economies with sound fundamentals whose currencies might not have been attacked had they adopted one of the corner solutions. this triad of factors - ( 1 ) the difficulty of conducting an independent monetary policy when the exchange rate is pegged and the capital account open, ( 2 ) sudden capital - flow reversals, and contagion - have profoundly affected the way we think about exchange - rate regimes. the experience of greece : pre - erm the foregoing factors significantly affected the greek economy in the 1990s. through 1994, the performance of the greek economy was pretty dismal. growth was almost flat, and inflation and the fiscal deficit as a percentage of gdp, were in the double - digit levels throughout the period. other eu countries were moving forward in their quests to become members of emu while greece was falling farther and farther behind. clearly, a regime change was called for. it came in 1995. the signing of the maastricht treaty in 1992 and the government ’ s publicly - stated objective of joining the euro area provided powerful incentives for mobilising broad public support for policy adjustment. among the policy measures undertaken were the following : •

to best bis central bankers ’ speeches achieve this. the bot ’ s inflation targeting framework has served us very well since its adoption over 10 years ago. apart from serving as an anchor for macroeconomic stability, the bot can also undertake steps, or act as a catalyst for the necessary changes, that will serve to enhance thailand ’ s competitiveness and augment economic adaptability. most directly, the bot can strive to enhance the effectiveness of the financial sector in serving as intermediaries of capital. our current strategy is to broadly deliver tangible improvements in four key dimensions. first, encourage financial innovation and the expansion of available financial instruments. second, broaden the choice available to firms and households in terms of financial services. third, reduce the cost of these financial services. and finally, improve access to them. to this end, the bot has embarked on a multi - pronged approach that involves a number of strategic plans. chief and foremost is the second financial master plan. this plan, which takes into account major global developments such as regional integration and global regulatory reform, will further this vision of a modern and inclusive financial sector landscape. at the same time, we are pursuing ways to improve financial system infrastructure, including through upgrades to the payment systems to promote more efficient settlement of private sector transactions. complementing these efforts is our development of the capital account liberalization master plan aimed at facilitating and encouraging more outward investment by thai residents in foreign assets. apart from the sizeable diversification gains to be had, a more streamlined capital account and foreign exchange regulatory regime will help to boost financial market development and reduce costs for the private sector. finally, in recognition of the fact that the full benefits of improvements in financial services cannot be realized without adequate readiness on the part of consumers, we have recently launched the financial consumer protection center to provide financial education to the public. in all this, it must be stressed that the bot can only do so much. effective upgrading of thailand ’ s competitiveness and lifting our level of productivity requires strong commitment from all segments of the economy. a common vision among all stakeholders is necessary, especially when it comes to implementing tough structural reforms. the bot will strive to be an active participant in pushing forward the national agenda on reforms, particularly on issues that involve the public sector, to upgrade the efficiency of our economy. let me end by thanking the german business community for the substantial contribution that you have made to our economy and i very much hope to see the mutually beneficial relationship between our countries continue