have been less. actually we paid back all foreign debts owed by the government and by the banks in full, with interests. we never needed any hair cut, we just needed time. but many foreign banks did not roll over the debts that fell due, despite the fact that the authority guaranteed all foreign debts of the banks. the continuous repayment caused the currency to weaken more than it should. the exchange loss was therefore greater than should have been, and hence the non - performing loan ratio. at the same time, our weak currency also created pressure on the exchange rates of our neighbors, causing the interest rate to be kept high for longer than necessary, which in turn also fed into the non - performing loan ratio. i am therefore attaching a lot of hope to the sovereign debt restructuring mechanism now being deliberated by the imf members. i do hope that it will offer better solutions for this kind of problems in the future. i will close by saying this. globalization is a two way street. relationship in the international financial market benefits both ways. funds flow to emerging economies because they are able to generate better return for savers in the developed economies. on the one hand, the emerging markets have to do their homework and preparation. but on the other hand, when things get temporarily out of balance, shouldn ’ t there be tools and safeguards to help them deal with situations better? the good news is there could, if all the countries here want to!

was totally revamped. we have merged four of these banks into the others, and have carved out non - performing loans to a national asset management company. two government - owned banks are now ready to be privatized to the general public. the banks that remained were forced to recapitalize. three of them were unable to find domestic capital, and decided to invite foreign strategic partners. we allowed the foreign banks to own majority shares and control management. now for the bad news! despite your effort in trying to strengthen your ship, it may not always be smooth sailing. i wish to point out two dangers that may crop up. the first danger is that there are sharks lurking under water - - in the form of highly leveraged institutions and hedged funds. no matter how well you try to manage your economy, no matter how good your intentions, there will often be some things out of synchronization. this will cause your currency or your stock market to be temporarily out of balance, or even wrongly perceived to be so. this is exactly when you need some time to work out the problems. but the attack by sharks can rob you of this precious time. i asked myself - - how can these sharks create so much trouble for the emerging markets? the problem is that these sharks are often able to command oversize resources financed by large international banks. i strongly believe that these financing should be curbed. leveraging beyond a certain threshold is particularly risky. i propose that the international banks that give credits to such institutions should be required to weigh these risks, in their capital requirement calculations, at a much higher rate than the 150 per cent currently being considered in the new basle accord. the second danger is that during good weather you tend to get assistance from many international banks. they will give you tow lines hitched to their catamarans that help increase your speed. however, when your ship starts to leak, they tend to cut the lines just when you need them most. on this issue, therefore, i strongly support the idea of private sector involvement that the imf is proposing. there should be ways for countries to cope with bank runs on the international scale. there should be opportunity for countries to renegotiate their debts with the foreign creditors, without imposing an insurmountable handicap that will prevent them from returning to the market in future. in the case of thailand, had such mechanism existed during the asian crisis, our non - performing loan ratio would