In summary on our financial institutions’ developments, they are going ahead very fast and they will have good rules to perform to, but I must admit we are coming from way off, and have a long way to go before we are competitive in our own country let alone abroad. Ladies and gentlemen, So far I have talked at some length about the macroeconomy, good governance and developments in our financial institutions. Even if all the things I have outlined about Thailand were to happen, many people think that the economy would still be prone to instability unless the central bank is also revitalized. I am inclined to agree with them. For some reasons not yet identifiable, and that worries me because a good change normally only can happen when the problems have been clearly identified. But in any case, there were signs that the Bank of Thailand somehow has been sidetracked into the crony capitalism of the rest of the economy, a development whose job it is of the central bank to try and prevent. It was obvious therefore that the Bank of Thailand had to be restructured into an organization that would be effective and neutral. Extensive work was therefore done employing re-engineering concepts using consultants as necessary. The six management levels have now been reduced to two, with people of different capabilities at the second tier depending on the importance of their work. At the operating level, there are also only two levels.
Yves Mersch: The European Central Bank and the Federal Reserve – an ocean apart? Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at Harvard University, Boston, Massachusetts, 12 October 2016. * * * Interest rates on both sides of the Atlantic seem to be trapped near zero. At first glance, looking only at the short term policy rates, one might think that both the Federal Reserve (Fed) and European Central Bank (ECB) are facing very similar circumstances and challenges. Below the surface, however, the differences are pronounced. In the euro area monetary policy continues to be highly accommodative, aiming to steer inflation back to levels in line with our definition of price stability. In the US, which is at a different stage of the business cycle, interest rate normalisation has so far been slower than expected. It is worth taking a closer look at the details to understand the unprecedented actions of central bank on either sides of the ocean in recent years. To do so, it is useful to divide the crisis into three separate phases. The first phase was the global financial crisis after the collapse of Lehman Brothers just over eight years ago. Central banks worldwide faced a largely common challenge to avert a collapse in aggregate demand. The second phase centred on sovereign debt, a problem which only affected the euro area. In the third phase, which is still in place today, stubbornly low global inflation and anaemic growth are compounding domestic challenges.