bonds of the member countries quickly came to enjoy terms of issuance mirroring those of germany. for over ten years, bond yields for the peripheral economies, including greece, ireland, and portugal, remained at the same level as that of germany. however, when the yields began to rise, they did so significantly. looking at the yield spread over germany, while the greek spread may be a little extreme, the spanish spread was just 0. 7 percent three years ago. at its widest, this reached 6. 4 percent in late july 2012 and now stands at 3. 5 percent. even if i will have to reserve my judgment on what the normal spread is, the experience shows that confidence – the determinant of spread – is fragile. third, there is the issue of the interaction between central bank actions and society at large. since the beginning of the crisis, market sentiment repeatedly shifted between optimism and pessimism. when tensions arose, the european central bank ( ecb ) supplied funds to the market so as to stabilize financial markets. when those actions succeeded in mitigating the tensions, there was a loss of momentum regarding reforms that were discussed under market duress. as a result, tensions returned and the ecb had to inject more liquidity. this was repeated over the last three years. liquidity injection by the ecb is a policy to “ buy time ”. structural reforms in the economy and government finances must be pursued during the bought time. this is a difficult balancing act, in which the central bank must maintain the stability of the economy and the financial system while keeping enough momentum in society for implementing reforms. bis central bankers ’ speeches these experiences and lessons from the european debt crisis seem to offer rich material for us in japan to contemplate regarding the role of the central bank. great east japan earthquake the third event to examine when considering the role of the central bank is the tragic great east japan earthquake. the earthquake confirmed the vital role played by the central bank in maintaining the essential physical integrity of the financial system infrastructure. confidence in the central bank faces a severe test when a disaster strikes, and in order to pass that test, the bank must succeed in guarding the physical in addition to the functional stability of the financial system and the markets of the economy. as we know, the tremor struck just before 3pm on a friday, as financial institutions were winding down the week ’ s business. as a result, there was very little remaining activity in the market,

bandid nijathaworn : are there limits to transparency? remarks by mr bandid nijathaworn, deputy governor of the bank of thailand, at the imf conference on central bank communications, mumbai, 23 january 2006. * * * first, let me thank the imf and the reserve bank of india for the invitation. it is a pleasure to be here in mumbai. and i should also congratulate the imf for putting up what seems to be another useful and successful seminar. my contribution today is to speak on limits to transparency. given the limitations of time, i want to begin by looking at the needs of central banks for limiting transparency, especially in the context of central banks ’ own operations. then, i want to speak on the challenge facing central banks in designing appropriate disclosure policy. and finally, i want to share with you my thought on how to approach transparency in the context of monetary policy. transparency has now become an important policy aspect of central banking. not only is transparency linked directly to the governance issue, but greater transparency also imparts important benefits to the effectiveness of central bank policies. in broad terms, three benefits from greater transparency are often cited. first, greater information provided by the central banks allows market participants to accurately evaluate the behavior and the performance of central banks. this is most important for public organizations like central banks. second, financial markets tend to work more efficiently with greater transparency. this is because uncertainty is reduced as market expectations are formed using a more superior set of information. and third, being more transparent also helps raise the quality of central banks ’ own works which directly contributes to enhancing their credibility. however, despite the positive benefits, there are occasions when there would be arguments for central banks to go less than full transparency, especially with regards to their market operations. this is because transparency is not only about providing information as the academia normally assume. but transparency is also about how a central bank is being seen or being known in its operations in financial markets. hence, for its operations to be effective, sometimes less - than - full transparency can be more efficient, for example, in the foreign exchange markets. therefore, from practical considerations, the rationale for limiting central bank transparency includes : first, legal requirements and the risk of impinging on personal privacy, as well as for reasons of market or commercial sensitivity and public interest ; second, the risk of compromising the decision - making process ; for example, saying too much or giving out too