, to enhance the stability of the international financial system. these proposals offer several important steps towards a more robust financial sector regulation. in june of this year, the european council voiced its agreement in favor of the creation of a european systemic risk board ( esrb ) whose mission will be to monitor and assess risks to financial stability in the eu financial system. this decision followed the publication of the de larosiere report on 25 february 2009, the commission communication of 27 may 2009 and the ecofin council conclusions of 9 june, 2009. the esrb will deliver quarterly assessments of risks to financial stability and policy recommendations. to carry out this task, the esrb will require a wide range of information from both macro - and micro - prudential analysis. these data would be obtained from the national supervisory authorities and national central banks. additionally, impact assessments would draw on information resulting from stresstesting exercises. this new framework poses a strategic challenge for the eurosystem because of issues pertaining to administrative support, logistical support and support in the form of expertise for the esrb. many european central banks and international organizations are about to implement permanent organizational changes as a result of the crisis ; enhanced coordination and cooperation will be unavoidable components of the new nascent regulatory and supervisory framework. in combination with more effective and strengthened regulation, central banks need to enhance their mission of ensuring financial stability. although this will require more resources and the development of expert knowledge, it is necessary to strengthen the financial system. for its success, it will also require support in terms of macroprudential supervision and coordination at both the eu and international levels. at the eu level, financial stability frameworks are largely national with an eu umbrella superstructure to facilitate cooperation, but which has been found wanting in terms of efficiency, of ex - ante compatibility between micro - prudential and financial stability objectives, of a mismatch between responsibilities and accountability in crisis management, of the lack of a crisis resolution framework for systemic banks, and of deposit guarantee schemes not fully consistent with the single financial market. thus eu financial stability will be enhanced by developing a commonly shared philosophy concentrated not on what the system can deliver, but on what it should deliver within the single market. at the international level, the crisis made clear that there has been a deficit of multilateral surveillance, and thus, the imf reform and setting up an operational framework for joint work with other international organizations and fora constitute inescapable tasks. i wish to

prasarn trairatvorakul : financial crises and the future of global and asian banking statement by dr prasarn trairatvorakul, governor of the bank of thailand, at the sasin bangkok forum 2012 plenary session “ financial crises and the future of global and asian banking ”, bangkok, 9 july 2012. * * * theme : “ strategy for known - unknown ”. the critical success factors are 3 cs : coordination of regulators, commitment forged by inclusiveness, and communal responsibility to restore market mechanism as a pillar of governance and financial discipline. good morning. it is an honor to join all of you today. i would like to thank sasin for organizing this forum and for inviting me. over the past three decades, sasin has played an important role in grooming business and policy leaders who have been instrumental in building thailand ’ s open and competitive economy. today, we are facing another critical juncture for thailand and the global economy. this forum has brought together the world ’ s leaders in public policy, businesses, as well as academia, and is therefore a rare opportunity for dialogue on our strategy going forward. ladies and gentlemen, this brings me to the topic of my remark today. the future of banking industry at the global level and in asia is being shaped by three major forces, namely, the fragile global economy, global financial regulatory reforms, and the rise of asia which faces its own developmental challenges. these forces are interrelated and complex, no one can claim to fully understand the final outcome. so is this the new paradigm of known - unknown? that is, we know what the major drivers of change are, but we cannot forecast outcome. so the key strategic challenge is how to deal with known - unknown. for the short - term, the key priority is dealing with the fragile and volatile global economy. stability is the priority for banks and regulators. the strategic policy question is how to get the right balance between risk and return, stability and growth. weaker banks will retrench, leaving rooms for the few stronger banks to take up market share. in asia, we have seen banks from the asia - pacific, notably japanese, chinese, and australian banks moved into market space where european and u. s. banks have retracted. asean banks are also shifting strategy to play a greater role to support their conglomerates in the regional expansion. if this regional banking trend continues, what are the implications for banks, regulators, and central banks? while