prasarn trairatvorakul : policy forum marking the bank of thailand ’ s 70th anniversary welcome remarks by dr prasarn trairatvorakul, governor of the bank of thailand, to the bank of thailand ’ s 70th anniversary and 3rd policy forum, bangkok, 12 december 2012. * * * governor glenn stevens, distinguished guests, ladies and gentlemen, 1. it gives me great pleasure to extend a warm welcome to all of you, our distinguished guests, to the bank of thailand ’ s policy forum. today ’ s gathering marks the third such event organized by the bank of thailand. the policy forum serves as a platform for prominent academics, policy - makers and market participants to learn from the visions and insights of outstanding international leaders. more importantly, the discussion and knowledge - sharing arisen from this forum will further equip the bank of thailand with a broader and deeper pool of knowledge to pursue its mandate. on that note, let me add that this year marks the 70th anniversary of the bank of thailand, an institution that has always been committed to preserving economic and financial stability. this commitment would not be possible without continual upgrading of our knowledge base through forums such as the one today. 2. today, the bank of thailand is truly honored to have governor glenn stevens of the reserve bank of australia with us to share his thoughts on “ challenges for central banking ”. this talk is especially timely because the effects of the global crisis are spreading to our region. asia is clearly slowing amid the weak us economic recovery and the euro crisis. at the last policy forum, dr. wolfgang schauble, federal minister of finance of germany, spoke at this forum and shared with us his views from the eye of the storm. now, as the storm moves east to asia, governor glenn stevens will be able to share with us his views from the perspective of our region with respect to the external challenges we are facing. 2 3. apart from common external challenges, australia and thailand also share many internal characteristics as well as a similar monetary policy framework. for example, both are open economies. both export commodities and import oil. the reserve bank of australia ( rba ) practices inflation - targeting with a flexible exchange rate. in fact, it is considered a pioneer among central banks as it adopted inflation - targeting in 1994. as you all know, the bank of thailand also practices inflation - targeting with a flexible exchange rate. both australia and thailand recently experienced substantial exchange rate swings amid the

regulation will have an impact, in particular on banks ’ liquidity management and the markets for liquidity along several dimensions. this is actually the aim of the regulation. had the result been “ business as usual ”, this would have probably made some market participants quite happy, but would have been a sign of failure. there is of course an issue of gradualism and calibration, with a view to avoiding the two extremes – an excessively abrupt adjustment and an everlasting phasing - out. but it seems to me that this issue has been dealt with in a reasonable way. the changes in the financial system caused by the regulation will have to be factored in also by the policy authorities. for central banks, the changes may be far - reaching, ranging from the transmission mechanism of monetary policy to interactions with several aspects of the operational frameworks. at the ecb we are actively working on these issues to ensure that our monetary policy continues to be conducted in an effective way, also in the new environment, so as to maintain price stability, our primary goal. thank you for your attention. giavazzi, f., and a. giovannini, ( 2010 ), “ central banks and the financial system ”, nber working paper series no 16228.