The economy registered a growth rate of 5 percent in 2006, a respectable number, against the backdrop of external and internal disturbances. The recent slowdown in consumption and investment could be traced to the confidence factor. Political uncertainties and the unwarranted strengthening of the currency that prompted the introduction of reserve requirements on short-term capital inflows, together with the amendment of the Foreign Business Act that, unfortunately, happened successively within such a short period of time, all had a negative effect on consumer and business confidence. However, we believe that the momentum has not been lost, and uncertainties only postponed consumption and investment decisions. Evidently, retained earnings to total assets averaging over Q1-Q3 of 2006 was at 17.6 percent, higher than the average of 13.3 percent in 2005, while capacity utilization rose to 74.2 percent in 2006, indicating that further investment in production capacity should be in the pipeline. To sum up, while challenges abound, we have weathered them relatively well so far. This can be attributed to a fine combination of the economy's resiliency and appropriate policy stance. By appropriate policy stance, we refer to the “right” policy for the “right” reason at the “right” time. BIS Review 27/2007  1  Let's now turn to our monetary policy. Monetary policy's main objective is to maintain monetary stability. By this we mean price stability and confidence in the value of the currency. Thailand has adopted inflation targeting since May 2000.
In the United States, these rules were not applicable to SVB, as certain exemptions, introduced in 2019 under the proportionality principle, apply to banks that are considered to be less important, this concept being understood in a broad sense since it includes banks with a balance sheet total of up to USD 250 billion. - The post mortem analyses carried out and published by the FED suggest that, had SVB been subject to these rules, it would not have complied with the short-term liquidity ratio as defined by the Basel Committee. Moreover, SVB's heavy reliance on tech companies' deposits should have alerted its supervisor if the additional monitoring tools required by international standards had been put in place. The same FED analyses estimate that SVB's interest rate risk sensitivity was around 35% before the crisis, well above the 15% alert threshold set out in the international rules and supposed to trigger supervisory action. - Monitoring compliance with regulations calls for strict, intrusive and reactive supervision, which, according to the FED, was not the case. Let me reassure you on one point: the European situation is radically different. The Basel Committee's rules are applied in Europe in their entirety and to all banks. By the way, I would like to add that Europe is in the process of finalising the transposition into European law of the latest reinforcements of the Basel III agreements, ahead of the other major jurisdictions.