speeches potential for “ crowding - in ” private investment should also be encouraged. multiplier effects would provide additional lift to potential growth at no public cost, and would be the very evidence that public policy has served its function of aiding the private sector. current supply constraints are not limited to physical capital, but extend to human capital as well. in 20 years, thailand will be among the first asean countries to enter an aging - population phase, with share of senior citizens rising from 15 to 27 percent of total population. early symptoms have already been felt in some industries, whose capacity to produce and invest is stifled by the lack of qualified labour. tight labour market is also indicative of labour shortage at the lower end of the skill spectrum. market forces have failed to resolve these issues. education policy, tax incentives, minimum wage, and migration policy all have bearings on the labour market dynamics. the long - term growth implications of these policies should be incorporated into the policymakers ’ considerations. implementing a comprehensive set of economic policies to lift potential growth, while pursuing other public policy objectives, is not an easy task. it requires a close coordination among various policy authorities. it also takes immense skills to introduce the right sequencing of policies at the right time. these prerequisites must also be backstopped by strong policy credibility, the second area of priority. 2. maintaining macroeconomic policy credibility in its quest to provide public services, the policymakers must avoid being the source of harm. international experience is filled with cautionary tales of how a lack of policy discipline could lead the economy awry. over - bloated and inefficient government increases risks of unsustainable public finance, and can sow the seeds for political conflicts. lax monetary discipline is associated with hyperinflation and financial instability. maintaining macroeconomic policy credibility and discipline must be an integral part of economic reform in thailand. policy credence is not an independent choice, but is shaped by the overall institutional setup. institutions are the set of rules and norms that governs the incentives of economic agents and constrains their behaviours. political developments, strength of the legal system, property rights enforcement, quality of workforce, degree of corruption are but some aspects of the institutional environment. they all interact with the policymakers ’ ability to pursue their objectives credibly. institutions evolve via a mixture of history, will power and luck. a combination of factors at critical junctures can determine the path of institutional change

tarisa watanagase : asian banking – coping with risks and seizing opportunities luncheon talk by dr tarisa watanagase, governor of the bank of thailand, at the 27th asian pacific bankers council ( apbc ) general meeting and conference, bangkok, 31 october 2008. * * * chairman of asian pacific bankers council, distinguished speakers and guests, i would like to thank the asian pacific bankers council for inviting me to join this meeting today. with great uncertainty ahead, actions of each and everyone – banks, regulators, central bankers – can have significant impact at home and abroad. at this time, confidence and trust forged by candid and opened communication between key stakeholders is of paramount importance. therefore, this meeting offers an immense opportunity for us to foster this dialogue. just over a month ago, the global economic and financial market condition was at a much different place from today. since then, the magnitude of market adjustment, volatility, and contagion across markets, types of institutions, and countries have proven that risk diversification is easier said than done. this is especially as markets and institutions seem to correlate in a crisis as a result of risk - aversion and fear of counterparty risk. nevertheless, the positive factor that has emerged is that governments of major economies and financial centres are now addressing this with comprehensive package. the aims are chiefly to restore “ main street ’ s ” confidence by deposit guaranty ; to shore up “ wall street ’ s ” confidence with adequate liquidity ; and to mitigate counterparty risk through interbank guaranty. the rescue package also spans injecting capital into systemically important players, and neutralizing short - term market impact of valuation of toxic assets by underwriting those risks themselves. ladies and gentlemen, up to now, banks in asia have been less affected by the direct impact of the global financial turmoil. at this juncture, subprime - related losses have been lower in asia than elsewhere. the estimated write down and credit loss, as recoded by bloomberg on 28th october, is about 27 billion us dollars for asia, compared with 430 billion us dollars in the u. s. and 221 billion us dollars in europe. while this may be the case, the impact on regional capital markets, including the prices of bank stocks and widening credit spread, signals a much deeper concern. events in the recent weeks reflected market worries of the second round impact via expected slowdown in the global economy, trade,