usually of very good quality. in most cases, and in particular in the eurosystem, the increase in the monetary base is determined endogenously by the banking system, motivated by banks ’ preference for liquidity and thus by the state of stress of the banking system. finally, these measures tend to address aggregate risks. these unconventional measures would automatically unwind, as improvements in inter - bank and credit markets would reduce the need to use these facilities. financial market indicators, risk premia components and their determinants as well as monetary indicators ( inflation expectations in addition to monetary and credit developments ) should be taken into account to carry out the assessment. some implications for financial stability this crisis has triggered a debate regarding possible tools to be developed to prevent the build up of financial imbalances and design countercyclical regulatory policies. some papers presented during this conference made such a point, calling for a new macroprudential approach and proposing measures of systemic risks that capture risk spillovers and tail risk correlations. i am of course very sympathetic to this approach and i also think that such measures should form the basis of any macro - prudential regulation. the general principle of this macro - prudential regulation is straightforward : it consists in ensuring that supervision manages to limit risks for the stability not only of a particular institution, but also of the entire financial system. its implementation is however a bit more complex and raises several policy issues : first, there are questions on how to calibrate these macro - prudential instruments so as to address common exposures across financial institutions and the contribution of each institution to system - wide risk ; a second issue is how to dampen the inherent procyclicality of the financial system ; a third issue is the respective importance of rule - based approaches versus more discretionary tools. finally, questions remain regarding the institutional set - up, in particular as to which institutions should be involved in the process and make the decisions. these issues are currently being debated in various circles and the recently - published de larosiere report made some substantial proposals regarding the institutional set - up. i will not elaborate on all these issues but simply touch on a couple of them. the most important features of a macro - prudential approach is that it treats aggregate risks as endogenous and considers possible feedback effects between the real economy and the soundness of financial institutions. its ultimate objective is to prevent costly recessions such as the one we are currently experiencing. consequently

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