It has proved to be well functioning, inflation is being taken care of, Baht exchange rate has been more stable and provided a better working environment for real sector, and international reserves have not reduced in spite of regular repayments to the IMF. And the framework has up to now been well accepted by the Thai public. But a good and credible policy still has its obstacles and challenges. Let me now turn to discuss the obstacles and challenges. The biggest, the most important, and the most worrisome challenge that we face right now is the world economy. A month ago, the world economy was already weak, with the United States uncertain about the timing of a recovery, Japan still having to undergo numerous reforms, and Europe not yet acting the role of the engine of locomotive for the resumption of world growth. A month ago, East Asian countries were already seeing their exports fast softening, especially in electronic and communication products. These countries were only on the verge of emerging from the depth of the biggest crisis in recent memory. And then disaster struck! The abominable terrorist attacks in the US would affect some businesses more that others. It will certainly affect some business sectors very hard - airline and hotel industry, insurance, some area of financial services. The American consumer confidence index by the University of Michigan during the past 4-5 years was always above the 100 point level. It dropped to 91.5 in August.
I think it is most important, in these times of uncertainty, for the Bank of Thailand to act as the linchpin to the public policy. We have to set the anchor that stabilizes the economy. It is fortunate that certain elements of our inflation targeting policy has been modified, allowing increased degree of management of the foreign exchange rate which facilitates trade and improves capital flows. The practice which was intended to take care of official reserves while the global economy is slowing down now happens to be the correct policy practice to be further enhanced to cope with addition weaknesses and uncertainties. More careful management of our international reserves is required so that we can fulfil our debt obligations under the IMF program, and still be left with a strong and healthy level of reserves. This will be achieved through a vigilant watch on the markets, keeping close dialogue with market participants, gathering intelligence and acting in a timely manner. Ladies and Gentlemen, I am here today not to give you a false promise that the BOT could provide policy measures that could lead to the recovery of the Thai economy, but to assure you that our existing policy measures are suitable with the situation and we would do our best not to allow Thailand another crisis of similar cause and magnitude as that of 1997.