thirachai phuvanat naranubala : the role of non - bank financial institutions in relation to monetary policy speech by mr thirachai phuvanat naranubala, deputy governor of the bank of thailand, at the regional seminar on non - bank financial institutions in east asia region, bangkok, 4 september 2002. * * * i wish to congratulate the securities and exchange commission of thailand and the world bank for organizing such an interesting seminar in bangkok, and to thank them for inviting me to share my thoughts with you today. i can see that the topics in the seminar will cover many important aspects of non - bank financial institutions ’ operations - - ranging from the regulatory and supervisory framework to capital market development as well as the issue of governance. but i am the only person touching on monetary policy aspect. monetary policy does affect an important part of your business, which is the bond market. because the one factor reflected in the bond market yield curve is inflation expectation. therefore, if the framework and the conduct of monetary policy result in low and predictable inflation, it will help curb volatility of the yield curve and support development of the bond markets. change in monetary policy stance also directly affect interest rate and hence the bond market. thus, it pays for you to understand monetary policy. monetary policy in thailand in order for you to do that, i have to start by telling you about how the monetary policy framework has evolved here in thailand. since the end of the second world war, thailand employed the regime of fixed exchange rate one way or another. at the beginning our currency was fixed to the british pound, and later to the us dollar - first directly, then later via a basket with a very heavy us dollar content. the regime had served us very well. it provided certainty for international trade, and it helped to attract foreign investment. we were able to maintain the parity with the us dollar for more than 18 years until 1981 when we had our first devaluation. the pressure on our parity in the early days was slight. thailand ’ s exports at that time were rice, rubber, tin and teak. our production costs for those items were among the lowest in the world. however, beginning from the 1980 ’ s, we began to industrialize. our industrial exports which was only 33 % of the total exports at the end of the 1970 ’ s quickly rose to 76 % in 1990 and even further to 86 % today. with industrialization, we

##aid, re - priced, and refinanced at higher rates. while financial market interventions are highlighted in this report, the continuing value of sustaining our economic momentum is also emphasized. in the 2017 fsr, there are discussions on the asean integration and on the advent of financial technology applications. the fscc sees a strong upside in these initiatives. discussion of these topics contextualizes our shared goal to accrue benefits derived from them while at the same time, remaining vigilant and prepared to intervene should systemic risks develop. finally, the fsr also explores data gaps and other areas of policy interest. better data is essential as empirical basis for our actions is required. however, data gathering and analysis are recurring challenges in the field of financial stability. thus, a strong emphasis is placed on this work to support and address other policy issues along the way. our technical team put considerable effort in completing the 2017 fsr. we expect that future issues will be released in the first trimester of every year. we also expect more engagement 1 / 2 bis central bankers'speeches from the public, market players and the media, not just to highlight future content but to raise appreciation for financial stability issues through a concerted communication plan. we have much to look forward to. thank you again for joining us today and good afternoon. 2 / 2 bis central bankers'speeches