value. so in many cases young families who already have limited liquidity at their disposal will have to start repaying their loans when the current period of deferred amortisation expires. are they aware of that, i wonder? the data shows that the widespread use of mortgage loans with 100 per cent deferred amortisation has been a very bad idea – since the system only operates smoothly if house prices continue to rise. finally, our preliminary analyses show that households with deferred amortisation have higher gross debt, both in nominal terms and relative to income, than households opting for loans with amortisation. and there is a tendency for these families also to have more debt before they take out the deferred - amortisation loans. * * * in recent years, i have raised a few concerns about the continued stability of the mortgage - credit sector in view of the major changes that have taken place within the last bis central bankers ’ speeches 10 years. i know you are also aware of these issues and are addressing them, but nevertheless, we still have a long way to go in some respects. firstly, deferred amortisation has made it possible for people to borrow more without having to pay more per month. this has contributed to large house prices rises and increased the vulnerability of borrowers and mortgage banks. against this background, i welcome the initiative by the minister for business and growth to introduce a code of good practice, so that consumers are offered variable - rate or deferred - amortisation mortgage loans only if they would be able to service a fixed - rate loan with amortisation. but the question is whether this will be a binding restriction, since i am told that you have previously introduced a similar rule yourselves. time will show. i am also pleased to note that the danish financial supervisory authority has decided to set up an expert group to look into the possibilities of dampening strong house price fluctuations. this will be a foretaste of the macroprudential work to be carried out by the new systemic risk council. in connection with the study of the danish housing market, danmarks nationalbank pointed out that the strong impact of house price fluctuations on the economy is inexpedient. at the time, danmarks nationalbank indicated a need to dampen future fluctuations by restoring the link between property value tax and current house prices and by phasing out access to deferred - amortisation mortgage loans for

first as our economic fundaments remain sound and the banking system is in a position to support economic recovery. as a result, interest rates in emerging market economies are expected to be raised faster than the industrialized countries. these interest rate and growth differentials against the backdrop of ample global liquidity are breeding the carry - trade behaviour with the usd as the funding currency this time. this leads us to our third challenge, which is how to prevent the surge in capital inflows from creating unwarranted instabilities such as excessive volatility in the currency market and asset price bubbles. in response to this challenge, we are beginning to see some countries such as hong kong, korea, singapore and china tightening their prudential standards to cool down speculative pressure in the real estate sector. in addition, brazil has recently imposed measure to slow down the inflows of fund into its stock market. in the case of thailand, net capital flows have turned positive in july and continued to remain so, causing the thai baht to strengthen as the current account is also in surplus. nevertheless, the thai baht has been moving in line with other regional currencies and the bank of thailand remains vigilant in ensuring this continues to be the case. in order to make capital flows more balanced, we are in the process of furthering the liberalization of capital outflows. this would also increase the flexibility of our businesses in financial management. as for the issue of asset price bubbles, while the signs of accelerating asset prices observed in many countries in asia are not so apparent in thailand at this time, the risk is not neglected. as a matter of prudence, the bank of thailand will continue to closely monitor asset prices to ensure financial stability prevails in the long term. ladies and gentlemen, i would like to conclude my speech tonight by reiterating that the economic recovery in thailand is expected to continue going forward. nevertheless, the risk of an aftershock is not negligible due to fragile global and domestic environment. hence, businesses and policymakers alike need to remain vigilant, but at the same time, should not be overcome by unreasonable fear. one important factor that will help speed up the process of recovery is the return of investment and trade within the country. with our economic resilience and strong economic fundamentals, i would like to assure you that thailand remains a lucrative place to invest. despite this difficult time, the bcct has always been