Therefore, inflation has not spread as broadly, and the likelihood of seeing second-round effects to date remains relatively low partly because of the softness of our labor market. That is the current state of the economy and the outlook, and so, what is the way forward a bit further? Page 4 of 8  Part 2: The Way Forward Immediate policy challenge is to keep the recovery intact. “No cliff” Looking a bit further, the immediate policy challenge is to ensure that the recovery is intact. We have to make sure that there are “no cliffs” or things that will interrupt our recovery path. What kinds of things would cause this? Firstly, we do not want financial conditions tightening too early because that would hurt the ongoing recovery path. In this case, we must do what is necessary to ensure that the banking sector still provides credit facilitation to the economy and help keep the recovery going. We also do not want to see an adverse impact on the Thai financial markets from the tightening in global financial markets due to the Fed or the ECB policy normalizations. However, we are well-placed to withstand the tightening, given our low external vulnerability. The other thing that would constitute a cliff is the deteriorating financial conditions. For example, a sudden and sharp uptick in non-performing loans could interrupt the banking sector and the credit intermediation channel.
The third open is open data because we realize that data will become an important asset. We have recently launched the D-Statement program that allows people to use the information at one bank to apply for financial services at another bank to improve access to services and competition. The other key element in the new financial landscape is sustainability which comprises two key components. One is the sustainability of the household debt. We have recognized that the household debt is very high in Thailand at about 90 percent of GDP, and hence it is crucial to design measures that attempt to put the household debt burden on a more sustainable basis. There is also another aspect of sustainability which is on the green and environmental issues. We are putting in place key building blocks that will be an essential part of the sustainability landscape. They include the green taxonomy and better disclosure to measure progress in the sustainability area. The last part of our financial landscape paper is about a more flexible regulatory framework. I think that this paper is important because it lays out where we see things evolving in the financial sector, and we would welcome your input. The paper is available on our website in both Thai and English. And if we look beyond the financial sector? I have talked about our policy responses to Covid-19 and then some of the longer-term issues we are addressing on the financial front through the financial landscape paper.