·  Debt restructuring as well as some positive environment in the economy, especially buoyant export growth in 1998 until the first half of 1999, together with the transfer of NPL to AMC and write-off alter full provisioning, helped NPL to decline from the peak of 48% of credit in mid 1999 to around 18% presently. The current challenges Against this background of achievements, I would now like to turn to the current challenges. The first is the challenge facing monetary policy. Key concern of macroeconomic policy in Thailand at this time is the weak domestic economy. This concern has been met by an accommodative stance of fiscal and monetary policies. But the external environment in which the Thai economic policy operates has changed considerably since the end of last year. The global economy is now slowing with possible substantial impact on the growth performance of the regional economies and on financial markets. Because of the strong dependency on exports, Asia will be one region most affected by the slowdown. Many countries have revised downward their export and growth estimates. Some have seen increased pressure on the external current account and the exchange rate. A key risk to the current environment is the global slowdown coinciding with a period of increased market volatility. This increase in market volatility could come about following possible further repricing of financial assets in the key markets abroad.
3 These requirements were further tightened in 2014 and 2019, in response to increasing vulnerabilities in the mortgage and residential real estate markets. Furthermore, Switzerland has a flexible regulatory framework that allows for both a broad and a sectoral application of the CCyB. In 2013, the Federal Council decided to activate a sectoral CCyB (SCCyB), following a proposal by the SNB. We deemed it to be the most costeffective response, given that vulnerabilities at the time – and even now – were concentrated in the residential real estate and mortgage markets. 4 The SCCyB was increased in 2014, deactivated at the onset of the pandemic, and has just recently been reactivated to a higher level. The SCCyB increases capital requirements associated with domestic residential mortgage loans while leaving those for other exposures unchanged. The sectoral focus therefore helps to minimise potential side effects on other credit segments and at the same time ensures an increase in overall banking sector resilience, since mortgage claims are the largest asset on Swiss banks’ balance sheets. 5  Experience with macroprudential instruments so far All the instruments we have been discussing have become part of the macroprudential toolkit in many economies since the GFC. Now over ten years on, we can draw first conclusions about their effectiveness, which is a prerequisite for their correct implementation. Let me note, however, that the assessment is still ongoing.