Bandid Nijathaworn: Rethinking procyclicality – what is it now and what can be done? Presentation by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the Bank for International Settlements/Financial Stability Institute-Executives’ Meeting of East Asia-Pacific Central Banks (BIS/FSI-EMEAP) High Level Meeting on “Lessons Learned from the Financial Crisis – An International and Asian Perspective”, Tokyo, 30 November 2009. *  *  *  First, let me thank FSI and the EMEAP Working Group on Banking Supervision for the invitation, and also a special thanks to our host, the Bank of Japan and the Financial Services Agency, for the excellent arrangement. The topic of this session is procyclicality and macroprudential supervision. As the first speaker, I have been asked to give an overview of the issue. A good starting point to discuss the issue is to remind ourselves that the issue of procyclicality, especially procyclicality of the financial system, is not new. Discussion about interactions between the financial system and the real economy, especially the idea that the financial sector can amplify economic activities and business cycles, has been well documented by economists, for example, in the financial accelerator model. Here in Asia, the issue of procyclicality had been brought to the fore during the Asian financial crisis, after which the issue was extensively discussed. Two important conclusions emerged from those early discussions.
Providing these poor people a dignified standard of living would require doubling their rate of energy consumption. According to the International Energy Agency (IEA), the energy transition to achieve netzero is doable but difficult. First, even when the world achieves net-zero emissions, fossil fuels will be with u s . Energy demand in Asia is expected to double by 2030 on the back of strong economic growth, rising affluence, and urbanisation. Even if overall global energy use falls in the net zero scenario, it will increase in many of the poorest countries. Fossil fuels will continue to play an important role in meeting the energy demands of Asia and Africa. Coal is unlikely to have a role in a net zero world but oil and gas will. The IEA has projected that if the world reached net zero by 4/9  BIS central bankers' speeches  2050, it would still be using nearly half as much natural gas as today and about one-quarter as much oil. Second, solar and wind power will need to be the largest energy source. The cost of solar and wind energy has fallen dramatically over the past decade and the amount of power generated through these renewables is rapidly catching up to that generated by coal. The IEA has projected photovoltaic capacity jumping twenty-fold between now and mid-century. This is no mean task – it implies by 2030 installing every day the generation capacity of what is currently the world’s biggest solar farm.