But at the same time, the programs implemented in 2008–2009 have lost their efficacy, and the authorities are taking a more cautionary stance. Today, China needs to rearrange its economy, and although events in Europe have caught China flatfooted with respect to its economic reforms, part of the adjustment to slower shortterm growth is necessary and partly inevitable. A significant impulse to public expenditure and investment will only be observed if there is a significant deterioration of external conditions. Overall, the Chinese economy faces important challenges in the short run. These could introduce fluctuations in commodity prices that threaten to expose the weaknesses of countries in the region whose recent growth has come almost exclusively from increased expenditure financed by the Chinese boom. In particular, it is especially important at this point that the region work hard to maintain the health of its fiscal and external accounts. Thank you. BIS central bankers’ speeches  5
On the infrastructure aspect, data is a critical issue. The data that could be collected at this time would be biased since the economic conditions are not normal. Nevertheless, we still need to start building up the database. In many countries, such a challenge is tackled with the cooperation between the financial institutions and the regulators. For example, in a number of countries, developed countries in fact, regulators plays crucial coordination role in supporting the built-up of the database system, in educating and knowledge transfer. The Bank of Thailand will be more than happy to play this role. Turning now to the second major challenge for the financial institutions, the intensified domestic and foreign competition brought about by liberalization, globalization and technology. Banks also experience competition from non-bank financial institutions, with the traditional financial firms and their business line becoming blurred by conventional wisdom. We also see such strategy as M&A across similar financial firms, or between financial firms and non-financial firms such as IT  BIS Review 87/2001  1  providers. In the meantime, outsourcing and franchising of technology, most notably through the venders for risk management software or solution have also exploded as a phenomenon. While the picture is still evolving so fast and future landscape hard to forecast, financial institutions find themselves stepping more and more into a less familiar territory, and tremendous efforts must be put in to survive the intense competition and dynamism. At the same time, attention must be diverted to deal with preparation for the New Accord.