More encouraging is the principle of better late than never, and the important thing is that Spain initiated the process of bank restructuring, now nearing completion, in 2009, that significant measures to reduce the budget deficit began to be adopted in May 2010 and that an ambitious labour-market reform was introduced in February this year. Spain has proven itself capable of making adjustments and reforms and this is essential to restore long-lasting upswings and sustainable growth. But this reassurance must not lead to complacency. What we have done so far, despite its huge importance, is not sufficient. And some of us have the thankless task of pointing this out. For example, when each financial reform has been approved it has always been argued that the result will be more credit, but although bank restructuring is certainly an absolutely necessary condition, we have always seen that it is not sufficient by itself to make credit flow again. We have to restructure the financial system so that, as in any process of industrial adjustment, the resulting banks can generate a healthy profit and be sufficiently solid to meet demand when the adjustment process is complete. However, credit will not improve until solvent demand increases. Hence the importance of other economic reforms to boost consumer and investor confidence, such as reducing the budget deficit and reforms, such as the labour-market one, to increase the economy’s growth potential.
To begin with, the Capital Account Liberalization Master Plan aims to make our financial markets serve residents and non-residents more flexibly with diverse products and services. This would facilitate regional financial transactions. Companies with regional operations are encouraged to set up a Treasury Center (TC) with the flexibility of foreign exchange regulations as well as tax incentives. To date, 16 companies, most of which are Multinational Corporations (MNCs) with intention to use Thailand as a springboard to gain access to CLMV, have already received a TC License, with several more to participate. The Bank of Thailand is also continuously promoting the use of local currency in regional trade settlement. In March this year, cross-currency dealers were appointed to act as clearing agents for the Baht and the Malaysian Ringgit. In the near future, we will allow securities companies to buy and sell foreign currencies within the scope of their brokerage business. Foreign corporations will also be permitted to borrow directly in Thai baht from domestic financial institutions to invest in the Greater Mekong Subregion (GMS). Also in March of this year, we have signed Letter of Intent with Malaysia and Indonesia, and negotiations are currently under way, to establish the Qualified ASEAN Banks. Looking forward, this initiative should help enhance financial connectivity, and improve operational flexibility of businesses in the region. Ladies and gentlemen, as I outlined above, the Bank of Thailand is committed to establishing financial infrastructure which will facilitate efficient and inclusive growth.