If inflation is expected to be above the 2% target during this time horizon, the interest rate is normally raised and vice versa. This rule was formulated with a view to making policy more intelligible, to ourselves as well as to others. We also believed a rule of this kind would serve as a structure for decision-making and help to enhance confidence in monetary policy. In my opinion, the rule has served these purposes. It has contributed, not least, to a more structured discussion of monetary policy issues and thereby to a deeper understanding of the choices we have to make. Have we observed our rule? Judging from this chart, I would say we have (Chart 2). The chart shows the repo rate in practice together with the path indicated by the Riksbank’s inflation assessments. You will see that we have followed our forecasts fairly closely and thus adhered to our rule of action. Deviations have occurred, mainly in the early years with the inflation target; I believe they were largely connected with concern about the exchange rate.
These include Thai banks’ aim to reduce cash usage and payment cost, leading to collective investment in the new faster pay infrastructure; banks’ and non-banks’ leveraging on the interoperability of our open infrastructure and common standards to compete and expand the range of products and services; and regulators’ and policy agencies’ active roles in promoting financial innovations and digital adoption. FinTech and digital finance have been and will continue to be among the top policy agenda of the Bank of Thailand. We need to further develop digital finance infrastructure, promote innovation, enable dynamic competition, and enhance adoption by the Thai people and businesses. Ladies and gentlemen, While technology advancement and technology adoption will remain crucial, there is another important aspect of financial services that we must not forget as we move on with our FinTech agenda: the value of financial network. Unlike other products and services, financial services will serve the people and the society best only when money—either in the form of physical cash or digital money—can freely flow without cost and friction. In today’s digital world, it is equally important that individuals and society can benefit from financial transaction  2  data. Therefore, preserving and strengthening the value of financial network will be imperative in advancing the development of our financial system. On the opposite end of a strong financial network is fragmentation, whereby financial systems and payment services become fragmented by the use of different core infrastructures or different standards that are controlled by a few dominant players.