Compensation for the gold price risk and the dollar exchange rate risk, in particular, is relatively poor. It is therefore inevitable that tighter bounds will be set on SNB profit distribution, once the existing distribution reserve has been exhausted. BIS Review 123/2006  3
In addition, through the supervisory process, we will continue to look for weaknesses in our supervised institutions that expose them to potential fraud. While the Bank of Thailand is here to support institutions in this manner, please keep in mind that the primary responsibility for fraud prevention remains with the board of directors and management. I would be remiss in not addressing the upcoming launch of the revised Basel Capital Accord. Basel II, as it is more commonly known, establishes expectations for financial institutions’ risk management processes. In addition to requiring an explicit calculation of capital requirements for credit and operational risk, Basel II requires institutions to have robust consolidated risk management processes. Institutions are expected to ensure that they have adequate capital for all other risks as well. Through the supervisory process, regulators may also require additional capital for institutions whose risk management processes are not fully compliant. Institutions can best address the expectations of Basel II by maintaining or establishing sound risk management processes. In Thailand, the implementation of Basel II will start at the end of this year, and the preparation for its implementation is progressing on schedule. As our institutions complete  2  BIS Review 52/2008  the implementation of Basel II, I firmly believe that we will see a commensurate improvement in the quality of risk management among our banks, particularly in the operational risk area.