4  BIS central bankers’ speeches  policymaker with an equal-sized loss as a 9% unemployment rate against a conservative estimate of 6% for the natural rate of unemployment. (I call this conservative, because while we think a number of factors such as increased job mismatch and extended unemployment insurance benefits have temporarily boosted the natural unemployment rate in the U.S., these factors are not expected to persist in the long-run). There also is an immediate corollary: If you aren’t as riled up over 9% unemployment as you would be over 5% inflation, then you either put even less weight on unemployment deviations in your loss function or you think that the natural unemployment rate is substantially higher than 6%. I’ll address the latter possibility later. However, I now want to turn to reasons why the challenges to policymaking in the current situation are orders of magnitude larger than those we face during more normal times. To preview, these are because: (a) we find ourselves in the aftermath of a Reinhart-Rogoff type financial crisis, which has resulted in severe headwinds weighing on the recovery process; (b) the economic costs of the vast amounts of unused resources in the economy are very large; and (c) the zero lower bound is a constraint on standard monetary policy actions, requiring a broader monetary policy framework if we are to provide more policy accommodation.
With this regard, we need to further promote financial cooperation and more trade and investment facility arrangements such as today’s initiative. Ladies and gentlemen, 9. I would like to emphasize that there are still untapped opportunities abound along the whole spectrum of exchanges and cooperation between Thailand and China. As to give you food for thought, the followings, are a few examples. Firstly, regional supply chain network. Our region has already been regarded as high quality and cost-effective production bases. However, there is still gap to be filled and opportunity to be grasped. Since many economies in the region are not well integrated into the regional production networks. According to the latest World Bank’s Trading Cross Borders indicator which measures the time and cost of trading across borders, the newer member of ASEAN all score well below the ASEAN average. This is mainly due to the huge gaps in infrastructure. 10. Here, we can narrow the gap by mobilizing our region’s abundant financial resources into infrastructure investment. In this regard, China plays a strategic role in the progression of infrastructure development in our region. The improved infrastructure will allow regional economies at various stages of development to participate in regional production networks in line with their evolving comparative advantage. Infrastructure investment is costly but it is worth the expense. 11. Secondly, research and technical development. Although China has emerged into the world centre stage in just recent decades, China is now a world class technology lab who owns the broad range of advanced technologies.