bank itself has been undergoing a structural revamp which i shall speak about only shortly as i have spoken on this many times before. basically the six levels of management and one level of operation have been transformed to have only two levels of management and two levels of operations, with each level having people of different ranking depending on the size of the job. this is the usual broad - base horizontal organisation that modern businesses have, not surprisingly proposed by a t kearney, our consultant. there are now no more “ banking ” or “ note issuing ” departments as first so clearly expounded in bagehot ’ s “ lombard street ” written in 1873. it is sad when one has to move away from what has become an institution of central banking, but we have to move with the time, as so many central banks have had to do in the past decade. work on reorganising the management side is now fully complete and we are working on reorganising the departments and its work system which will take about another two years. we have of course over the last two years been developing control over the money market. developing the debt market and improving our supervision examination capabilities. we can truly say that we have very good information in the form of database daily on the money markets in the country and have developed the instrument to fairly effectively control offshore activities. in terms of the debt market, we have developed a government bond market and a yield curve, and our next move is in the area of the private sector debt instruments which we have formally formulated into project, using a t kearney ’ s methodology to execute our plan. in the area of examination and supervision, we have now finalised a system where we train and with the assistance of outside authorities certify our supervisors to be of high and uniform - standard apart from changing the method of supervision from individual - based to one of approval - by - peer - groups comprising a supervision and examination committee inside the central bank. let me get on to more interesting subjects. changing yourself is sometime easy and sometime difficult depending on how you manage to tackle the psychology of it. but changing other people is always difficult especially if they are well entrenched, rich, and will not let go of their apparent present prosperity even though they are heading for disaster sooner or later. i am of course talking about changing our banks which we are trying to do through three main approaches : competitiveness, good governance and transparency. although fully half of our banks will probably be

bandid nijathaworn : financial sector surveillance – what have we learned? speech by mr bandid nijathaworn, deputy governor of the bank of thailand, at the ieo seminar on “ strengthening imf surveillance : what have we learned from independent evaluation? ” imf – wb program of seminars, singapore, 18 september 2006. * * * first, let me thank the independent evaluation office of the imf for inviting me to speak today on strengthening imf surveillance. we, at the bank of thailand, have been a keen supporter of the independent evaluation office ever since its inception in 2000. in particular, efforts on the fund ’ s advice on capital flows management as well as its recent review of fsap, have been useful for us in shaping our own policies. i wanted to mention this at the outset, as a way of registering our support and appreciation. my task today is to speak on the financial sector dimension of surveillance. given time limitations, i want to cover just two issues. the first is to comment on the new direction of fund surveillance on financial sector, as embedded in its medium - term strategy, particularly on the issue whether the new direction is adequate vis - a - vis what remains to be done in crisis prevention. and the second is to comment on a few additional areas that should be emphasized going forward in the context of surveillance for emerging markets. but before doing that, let me start first with the key issue of this seminar - that is the lessons learned. the asian financial crisis of the 1990 ’ s has been described by some as being the most severe in its depth and regional coverage. looking back, i think three important lessons clearly stand out. the first is the risk associated with liberalizing capital flows without adequate safeguards and proper policy framework. important in this context is the need for greater policy and economic flexibilities to help manage the effects on macroeconomic stability from persistent capital inflows and possible subsequent reversals. also important is the need to have in place a credible crisis prevention mechanism that will allow timely liquidity support to be mobilized. as for the financial sector, the lesson learned is that a resilient and robust financial sector is key to avoiding crisis. the foundations for a resilient and robust financial sector are in the strong framework for prudential regulation and supervision, greater transparency and good governance, as well as a balanced financial sector. this last point applies particularly to well developed capital markets that can allow financial