. and following this conference, the bank of thailand will embark on the process to articulate our medium - term plan to increase competitiveness of financial institutions, improve people access to financial services, ensure financial system sustainability, and take this opportunity to systematically correct problems which remain unresolved by financial reform implemented thus far. ladies and gentlemen our financial institutions must be the sources of our national strength and should be the main instrument in our development. in the past five years, significant and comprehensive reform of our commercial banking system has been achieved, with financial stability being restored ; corporate governance, strengthened ; competition within domestic banking system enhanced with the entrance of new competitors. at the same time, new financial services such as e - banking and other innovative instruments such as smart cards are on the offer to customers giving them more choices of financial services with greater qualities. we are therefore at this point ready to move forward to the next step – to articulate our vision for the future of commercial banking and financial services in thailand, taking into consideration powerful forces from the rapidly globalized international financial markets and the emerging financial landscapes within the region. ladies and gentlemen the new financial sector master plan must be realistic and address the fundamental problems that we have. i see no role for the plan to strive to be a financial center or to develop the financial sector for its own sake. thailand has a dual economic structure, with the modern industrial sector overlaying with the more traditional sectors outside bangkok which employed more than half of our population. thus, we should concentrate on improving the efficiency and stability of our domestic financial institutions to best serve our real sector. and our vision for thai commercial banking and financial services – if it is to be useful – must consist of two parts within a single integrated framework : one for our main banking activities and the other for those in rural areas. as we look at cross - country experiences on commercial banking and financial system inquiries, we were drawn toward the experiences of australia, canada, and south african. the south african ’ s standard bank has been quite innovative in using new technologies to reduce cost of providing banking services to the urban poor who were formerly thought of as un - bankable. similarly, the canadian financial services taskforce put much emphasis on “ ensuring highest standard of quality and services to consumers, regardless of their income, and regardless of where they live ; urban or rural, and also to individual businesses, whether they are large or small ”. on the other hand, the emphasis of the australian financial system inquiry

bandid nijathaworn : are there limits to transparency? remarks by mr bandid nijathaworn, deputy governor of the bank of thailand, at the imf conference on central bank communications, mumbai, 23 january 2006. * * * first, let me thank the imf and the reserve bank of india for the invitation. it is a pleasure to be here in mumbai. and i should also congratulate the imf for putting up what seems to be another useful and successful seminar. my contribution today is to speak on limits to transparency. given the limitations of time, i want to begin by looking at the needs of central banks for limiting transparency, especially in the context of central banks ’ own operations. then, i want to speak on the challenge facing central banks in designing appropriate disclosure policy. and finally, i want to share with you my thought on how to approach transparency in the context of monetary policy. transparency has now become an important policy aspect of central banking. not only is transparency linked directly to the governance issue, but greater transparency also imparts important benefits to the effectiveness of central bank policies. in broad terms, three benefits from greater transparency are often cited. first, greater information provided by the central banks allows market participants to accurately evaluate the behavior and the performance of central banks. this is most important for public organizations like central banks. second, financial markets tend to work more efficiently with greater transparency. this is because uncertainty is reduced as market expectations are formed using a more superior set of information. and third, being more transparent also helps raise the quality of central banks ’ own works which directly contributes to enhancing their credibility. however, despite the positive benefits, there are occasions when there would be arguments for central banks to go less than full transparency, especially with regards to their market operations. this is because transparency is not only about providing information as the academia normally assume. but transparency is also about how a central bank is being seen or being known in its operations in financial markets. hence, for its operations to be effective, sometimes less - than - full transparency can be more efficient, for example, in the foreign exchange markets. therefore, from practical considerations, the rationale for limiting central bank transparency includes : first, legal requirements and the risk of impinging on personal privacy, as well as for reasons of market or commercial sensitivity and public interest ; second, the risk of compromising the decision - making process ; for example, saying too much or giving out too