First, money is needed to place even a riskless bet. That was the scarcest of commodities after the failure of Lehman Brothers in October 2008. Second, placing a bet also requires a trustworthy bookmaker. They too were thin on the ground in the midst of crisis. In their absence, arbitrage may be more “apparent” than real. Market prices are likely to deviate from fundamentals due to liquidity and counterparty premia. By way of illustration, Chart 5 provides a decomposition of the yield on sub-investment grade corporate securities in the UK. By mid-2007 at the peak of the boom, the liquidity premium on these assets had pretty much been eliminated. By the end of 2008, this liquidity premium had risen by almost 2500 basis points. As capital markets moved from flood to drought, market prices turned from rich to poor. Fair value and financial stability Against this backdrop, what are the potential financial stability implications of using market prices as a valuation yardstick? In roughly chronological order, three main arguments have been used in defence of marking to market. Broadly, these mirror the three historic phases of fair value:   “Protecting shareholders”  During the 19th and early 20th centuries, as joint stock companies sprang up, the key purpose of company accounts was to protect shareholders’ interests. Like truth in the face of the war, in the face of crisis the financial accounts appear to have been the first casualty.
Governor Veerathai’s Statement Your Excellency, Fellow Governors, Ladies and Gentlemen, Members of the press,  A very good afternoon to you all,  It is my great pleasure to welcome our distinguished guests to this special event before the year ends. Let me extend a very warm welcome to Governor Agus and Governor Muhammad Ibrahim who have both travelled to Bangkok specifically for this occasion. The year of 2016, which is coming to the end soon will be remembered by economists and financial professionals as a year of the unexpected, beginning from China's circuit breaker in the very first week of the year, to negative policy rates, to Brexit and the US elections. Greater uncertainties now hang over the global economy. Fortunately, our ASEAN region, with its high potential, is a bright spot in the world. This is therefore 1  time for us to navigate today’s uncertainties through our concerted efforts to bring out the potentials of our ASEAN region. What we are witnessing here today is a renewal of the spirit of regional integration by relying more on collaboration to serve as a key driver for sustainable growth to benefit all of us. The MoUs that we are about to sign will provide flexibilities on foreign exchange regulations for the settlement of trade and investment in local currencies, resulting in greater efficiency and convenience for businesses. Another key merit of this framework is that businesses will be able to better manage exchange rate risks.