2  BIS central bankers’ speeches  This leads me to my final point, which is, how the Bank of Thailand plans to deal with these potential risks on both the external and internal fronts. For external risks, recognizing that sizeable capital inflows could be out of line with real developments, and that spillovers can persist in the near future, we need to closely monitor the external environment to capture these risks. It is also important to improve Thailand’s capacity to cope with international capital flows by developing a systematic capital flows master plan, and promoting the use of financial hedging instruments and the foreign exchange risk management capability of the private sector. The Bank of Thailand also stands ready to implement emergency measures of varying degrees to deal with volatile capital movements as appropriate. In addition, to prevent these inflows from causing economic and financial instability, the Bank of Thailand has prepared a toolkit of macro prudential measures to ensure the soundness of the macro economy and the financial sector. Measures to prevent overheating in particular segments of the property market are one example. Ladies and Gentlemen, It would be uncommon for a central banker not to mention inflation and monetary policy in any speech. I would therefore like to emphasize that the Bank of Thailand’s monetary policy aims to achieve domestic price stability and tighten to more normal levels consistent with Thailand’s macroeconomic fundamentals. Price stability helps foster a stable and predictable macroeconomic environment conducive to investment and growth.
Prasarn Trairatvorakul: The rise of Asia – finding the right balance for policy Address by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Japan Bank for International Cooperation (JBIC) seminar on “Outlook for the Global Economy and Financial Markets 2011”, Bangkok, 8 February 2011. *  *  *  Distinguished Speakers and Guests, Ladies and Gentlemen, It is my honor and pleasure to address today’s distinguished audience on the outlook of and the main challenges facing the global and Thai economies. Rather than giving you data and projections, which are readily available, I would like to take this opportunity to share with you my observations on the economic future of Asia and Thailand. While economic recovery in the West will likely be constrained by crisis legacies, the rapid bounce-back in Asia and its fast rising role in the world economy have made many believe that Asia is on the continued rise, to the extent that Asia is entering a golden age. Nevertheless, there are questions whether Asia can manage the risks associated with continued growth, particularly inflationary pressure and the impact of volatile capital flows. In line with this introduction, my presentation today will focus on four related topics. First I would like to pose a question whether Asia is truly approaching a golden age. Secondly, to sustain the rise of Asia, I would like to highlight the need for Asian economies to build capacities, as well as strengthen innovation and productivity.