Let me qualify my view by saying that the reality is much more complicated. So let me go quickly over some salient details of the euro crisis and its current impact on Asia. A great deal of uncertainty, much of it induced by lack of policy clarity, surrounds the euro crisis. This is reflected by how global FX markets have been in turmoil as investors fled euro and Asian emerging markets assets for safe havens. The Thai baht was not spared from this turbulence and experienced high volatility and bouts of weakening pressure. However, investors eventually returned to emerging markets in Asia as yields in advanced economies moved lower and Asian fundamentals improved amid slowing inflation pressure. In Thailand, government bonds, in particular, have proven attractive. In fact, foreign participation in both bond and equity is now above pre-Lehman levels. However for equity, the rate of return was  BIS central bankers’ speeches  1  slow of late; net inflows were negative last year but are now slightly positive for the second half of this year. Amid all this turbulence, all this back-and-forth, the baht fluctuated in tandem, first depreciating in the first quarter of the year up until July and then appreciating somewhat. This trend was punctuated by bouts of volatility each time euro policy faced implementation difficulties once push comes to shove and member nations have to make the difficult tradeoff between national interests and supra-national interests. But back to the question of how the euro crisis will play out.
Before passing on the floor, I would just like to mention that Mrs. Lomax has previously visited Romania. Ten years ago Mrs. Lomax was negotiating development programs in Romania on behalf of the World Bank with a team including myself and some other people in this audience. She is now here again to assist us in preparing to achieve another goal related to Romania’s development, that of lasting price stability. 2  BIS Review 28/2005