tarisa watanagase : inflation targeting – a reflection on thailand ’ s experience opening remarks by dr tarisa watanagase, governor of the bank of thailand, at the bank of thailand ’ s international symposium on “ challenges to inflation targeting in emerging market countries, ” bangkok, 13 november 2006. * * * honorable guests, distinguished participants, ladies and gentlemen, first, i would like to extend a very warm welcome to all of you here today. this is the second time that the bank of thailand organizes a symposium at an international level. our first international symposium, “ practical experiences on inflation targeting, ” was held in october 2000, a few months after we had adopted inflation targeting as a new monetary policy framework for thailand. but this symposium today is the first one that brings together central bank governors, senior central bank executives, world - renowned academics and policy experts from leading international organizations. many of you have extremely tight schedules and some have to travel a very long distance. i would like to express our great appreciation for your presence and very much hope that what we will learn together in this symposium is beneficial to all of us. ladies and gentlemen, thailand formally adopted inflation targeting as a monetary policy framework on may 23, 2000. the change in policy regime was a result of our search for an appropriate nominal anchor after the floating of the thai baht in july 1997. in the interim period, we used monetary aggregates as our policy target. it was during that time that we came to recognize that the relationship among monetary aggregates, inflation, and output in thailand did not have sufficient stability and predictability to make monetary aggregates a good nominal anchor of our monetary policy. inflation targeting then appeared as a natural choice for our new monetary policy regime. from that day onward, price stability has become the bank of thailand ’ s overriding policy objective. the core inflation rate was, as it is now, to be kept within a 0 - 3. 5 percent range. when thailand adopted an inflation target some six years ago, the policy regime was a relatively uncharted territory for emerging market economies. although the history of inflation targeting dates back to 1990 with the adoption of an inflation target by the reserve bank of new zealand, prior to 1998, inflation targeting was pursued mostly by developed economies. the first substantial crosscountry study of inflation targeting, published by ben bernanke, thomas laubach, frederick mishkin and adam posen, who is here today, in 1999,

fit their livelihood. secondly, to ensure quality of usage, we need to enhance financial literacy. with higher financial literacy, the poor could utilize the services more efficiently and productively, for example, having the ability to turn received credits into income and savings and so on. finally, we need a good system of consumer protection in order to ensure fair and transparent provision of financial services. i believe that financial regulators have an important role to play in all three areas. the fact that we are all here today, already signifies our commitment to addressing such issues, thus ascertaining the success of financial inclusion. not just for our own sake, but also for the sake of our friends around the world. after having seen this morning ’ s agenda, i am certain that there will be plenty of great discussions among us today. i myself am very interested to hear us take the current policy challenges further, arriving at how best we think afi can play a role in tackling such issues. of course, us working together to ensure the sustainability of the afi community together with our policy impact would also be key. i look forward to discussing our proposals of potential afi flagship projects, all of which, i believe would make significant contributions to the global efforts on financial inclusion. in this connection, the bank of thailand will be presenting our proposal on “ using survey data to design financial inclusion policy ” for your consideration. the project findings would not only provide a useful international research contribution in the area of financial inclusion, but also an easily replicable exercise for anyone to conduct and repeat over time, thus adding to the stock of critical grass - root information on financial access. finally, i also look forward to discussing with you on the governance and other related issues of our start - up committee. without further ado, let us now give our attention to alfred who will be updating us on afi ’ s latest progress and lead us through the rest of today ’ s agenda. thank you for your attention. alfred, the floor is yours.