This, in my view, is a major challenge for all of us in the financial community. The second major challenge to the Thai economy is how to cope successfully with volatile global financial markets and an appreciating baht. This challenge is the more pressing of the two. Let me explain why. Thailand, like many emerging market economies with a small and shallow financial market, is particularly vulnerable to fast-moving international capital. Such rapid movements of capital flows, if vastly out of line with our ability to absorb it, can have negative impacts on the export or import sectors, depending on the direction of the exchange rate movement. In our case, the recent surge in speculative capital inflows caused a rapid one-way appreciation of the baht relative to regional currencies. The appreciation momentum hardly reflected our economic fundamentals. Left unchecked, it could have presented a clear threat to growth and stability – beginning with export, a current engine of growth, trickling down to the real sector, and eventually harming financial stability. In dealing with currency appreciation, the prevailing wisdom of "letting the market work" has been given a chance. Yet the baht kept rising against almost all major and regional currencies at an alarming speed. Letting such rapid appreciation work itself out could have entailed significant risks to our agriculture sector, which employs nearly 40% of the labor force, and small and medium-sized firms in the labor-intensive manufacturing sector. We recognize that the real sector needs to adjust.
Single Resolution Board Annual Conference – Brussels, 19 September 2022 Armed peace and risk proportionality: how to strike the right balance  Speech by François Villeroy de Galhau, Governor of the Banque de France  Page 1 sur 5 Ladies and Gentlemen, It is a great pleasure for me to be with you at the European Commission for the 2022 SRB annual conference, and I would like to warmly thank Dr Elke König for her invitation to give this keynote speech today. Above all, I would like to pay tribute to Elke for her hard work as first Chair of the SRB since its creation in 2015 – SRB staff can also be very proud. You have a strong ally in France, with whom I have great pleasure working each and every week: Dominique Laboureix. I won’t be betraying any great secrets by saying how much he enjoyed taking part in this creation, and how much he remains attached to the SRB. The title of this conference (“European banks: resolvable and ready for crisis?”) may cause some anxiety – yet a healthy type of anxiety. It reminds us of possible dangers ahead, and serves as a strong reminder of what happened to banks during and in the aftermath of the great financial crisis. The temptation to forget about these events would be a huge mistake: lessons of the past, especially of that kind, should remain vivid memories that motivate us, day after day, to build a safer system.