To be successful in today’s environment, a case-by-case approach needs to be market-based and adaptive to the particularities of the case at hand, as well as the global financial and economic context. This requires seeking, as far as possible, to work with the grain of a given situation, as a good artisan works with the grain of the wood. •  The approach needs to be market-based in part because that is what the game is all about. Today, the relevant considerations for crisis management relate more to markets and the problem of restoring market confidence, than to individual borrowers and creditors. To the extent that systemic concerns pertain, they more often relate to the risks of market disruption and over-adjustment than to potential domino effects caused by the failure or impairment of key institutions. •  Also, in today’s environment, a market-based approach is much more feasible. Financial recoveries can proceed more rapidly than in the past, because market participants generally have the ability—and many have little choice, because of the prevalence of mark-to-market accounting—to digest losses and move on. •  Working with the grain means recognizing the realities and limitations inherent in the current market structure and its functioning, and tailoring approaches accordingly. This involves acknowledging that attempts to impose solutions are unrealistic and potentially counterproductive. Instead it involves identifying ways to induce and encourage desired behaviors. I would also suggest that it means avoiding departures from normal market functioning whenever possible.
In a developing economy such as Thailand, the customary savings behavior is to save first and spend later. BIS Review 50/2004  1  Developing economies can and should benefit from this type of behavior since it allows for vital investments to be madc using domestic savings, thereby lessening reliance on extemal capital inflow, while at the same time promoting an economically viable savings-investment gap. On the other hand, the savings behavior of the west and developed economies tend to lean toward spend now save later. This type of behavior is practicable in western countrics due to many factors that can be summed up under the heading of high level of economic development. The existence of social welfare systems, mature capital markets, diversified economy, and highly educated workforce are a few factors that allow such countries to be able to grow under a relatively low savings environment. Without such factors, a country could find it difficult to grow and develop without straining its finances. Coming back to Thailand, it is possible to say that with more widespread usage of credit cards and other types of consumer loans, we can expcct Thailand’s savings behavior to become more in line with those of the developed economies. This trend is a double-edge sword that if not managed carefully can cause a severe negative savings-investment gap. Such predicament will worsen Thailand’s dependence an extcrnal capital inflow that historically has shown its ability to change direction rapidly and jeopardize macroeconomic stability.