These transactions all rely on a foreign exchange market that functions with integrity – that is, one that allows a diverse set of buyers and sellers, supported by robust infrastructure, to confidently and effectively transact at prices that reflect available market information and in a manner that conforms to acceptable standards of behavior. In my remarks today, I would like to expand on the essential role that the foreign exchange market plays and examine some of the ways the market’s structure has changed in recent years. Then, amid the backdrop of a number of recent negative developments – specifically, evidence of unethical and illegal behavior by some market participants – I will discuss the critical role that implementation of and adherence to strong global industry standards, including best practices, can play in restoring and maintaining the integrity of the foreign exchange market. In doing so, I will highlight recent and ongoing efforts to help strengthen these standards through the Financial Stability Board and collaborative efforts by major central banks and market participants working within and across jurisdictions, often through local foreign exchange committees. I will conclude by setting an expectation for all market participants in foreign exchange to help support this work in order to reinforce the integrity of, and the public’s trust in, this important market. The importance of the foreign exchange market The foreign exchange market is perhaps the largest, most globally integrated, and most active financial market in the world.
The banking sector liberalization agenda includes discussion on harmonized standards of regulations, which is key criteria for licensing, as well as financial stability arrangement. This will be finalized this year, with timeline of liberalisation in 2014 to 2020, depending on country’s readiness. Capital market integration will also be important to ensure that regional market becomes deeper and wider, to serve growing needs of growing and large investment projects to link up the region’s production and infrastructure. Moreover, it will also help to intermediate capital inflows into the region in a more efficient and stable manner. Regional capital market will also be important for managing the growing pension funds of the region, where some countries are facing growing savings but aging population. It will offer a regional alternative to the currently fragile market in the west. How well prepared is Thailand for this? The banking system already has high degree of foreign participation. Market share of foreign banks and hybrid banks is 20 percent. The foreign banks also accounts for about 50 percent of transactions in OTC derivatives market here. These main players in foreign and hybrid banks include banks from the UK, EU, US, Japan, and China, as well as banks from Singapore and Malaysia. Thus, the banking system and Thai banks are familiar with international competition. Thai banks already have presence in all ASEAN countries, except Brunei. And for this, the AEC will help reduce barriers and enhance business operations of Thai banks abroad.