Measures may be warranted for nonbank financial institutions if they expect Federal Reserve credit to be made available to them during times of stress. 5  The interest income and fees that accrue to the Federal Reserve from these facilities are ultimately remitted to the US Treasury. 6  BIS Review 80/2010  Conclusion Overall, recent financial market developments serve as a reminder that the central bank’s role as a liquidity provider can be critical during periods of financial stress. In this speech, I discussed the reintroduction of the liquidity swap lines with foreign central banks and reviewed our experience involving the TALF—two programs that provide dollar liquidity to a broad set of counterparties. Our experiences with these two programs, and with the other facilities launched during the financial crisis, suggest that liquidity programs can be quite effective at restoring market functioning and facilitating the flow of credit to households and businesses. However, because these facilities differ from traditional discount window activity, they raise questions about the appropriate scope and structure of the Federal Reserve’s role as liquidity provider. We should continue to evaluate our experience with these facilities and with other liquidity programs to more clearly define an appropriate framework for providing liquidity to the markets in the future.
Compared to some countries at this time, the banking sector in Thailand is functioning normally, with the financial markets remaining relatively stable despite greater volatility and uncertainty in the global economy. At the Bank of Thailand, we are optimistic that policy efforts at the global level will be successful in stabilizing the financial markets and in providing a comprehensive solution to the current crisis. Nevertheless, our view is that the adjustment that follows, and hence the process of global recovery, will probably take time. More importantly, in the Thai context, given the global nature of the crisis, and the fact that our economy has been affected mainly through contagion, it will be difficult for an economy like Thailand to achieve a sustained recovery on our own, if the global economy does not recover. Therefore, in the context of policy, the focus of policy response in Thailand should be on helping the economy and the private sector to adjust to the impact of the crisis, while ensuring that the key economic institutions and systems 6 most importantly the banking sector 6 continue to function normally, so that the economy will be in a position to move forward quickly once the crisis storm passes. BIS Review 45/2009  1  It is in this context that the Bank of Thailand has been shaping our response to the current economic downturn.