Financial service providers, both old and new, can capitalize on modern technology to provide new – and perhaps once unimaginable – products and services. These technologies will allow business to by-pass the traditional stages of financial market developments, especially those that are paper-based or those that rely on brick-and-mortar infrastructure. Let me cite a few examples which I find very encouraging. In Thailand, an offshoot of the TMB Bank, called ME by TMB, is a bank that does not rely on physical 5  World Bank Global Findex 2014, measured by numbers of those not having bank accounts  3  branches. Vietnam has a similar model called Timo Bank. Businesses are conducted online, making full use of digital payment technology. These banks pass on reduced costs to consumers in the form of better offers, such as higher deposit interest rates or better services. As technology provides more choices, there is room to provide more alternatives by easing some of our regulations. Take, for example, local currency usage for trade settlement and direct investment in our subregion. The Bank of Thailand is currently working with central banks in the region to relax regulations on the use of local currency for cross-border trade and investment. Amid volatile global financial markets, this will offer businesses more options in choosing currencies for trade settlements. Exporters and importers are able to reduce their foreign exchange conversion costs and better manage foreign exchange risks by using their local currency for settlement.
The local currency framework that Thailand concluded with Malaysia has been operational since 2016. We are now discussing a similar framework with Indonesia, which will be implemented by the end of this year. We also have a bilateral swap agreement in local currencies with China to facilitate the use of renminbi and Thai baht bilateral trade and investment. We hope that similar frameworks can soon be expanded to other GMS countries. *** Ladies and Gentlemen, 3. Let me now turn to my third message – the challenges and the role of policymakers to support businesses. While the GMS was first initiated by policymakers, it is now driven mostly by businesses. In order to further support business development, policymakers need to set proper incentives, governance structures and regulatory frameworks to foster closer market linkage. I see two ways we can address this. First, each individual country must ensure that its rules and regulations are sufficiently flexible to support innovative regional connectivity and technologies. To provide regulatory flexibility and to support FinTech in Thailand, we have allowed innovative FinTech products to be offered and pre-tested under the so-called “regulatory sandbox”, which is designed to be a safe space where businesses can test innovative products, services business models and delivery mechanisms. This arrangement will make it easier for firms to test their products, and for regulators to develop necessary regulatory requirements before these products are launched to the public.