Second, there are significant challenges associated with the construction of the data in the index, especially related to the measure they call “jumbo deposits.”27 Virtually the entire rise in their measure of dispersion in late 2015 comes from this one series, but this rise is largely eliminated if the series is instead constructed as done in the Organization for Economic Co-operation and Development (OECD)’s Main Economic Indicators for the United States. Third, it isn’t obvious to me that higher or lower levels of this index correspond to “better” or “worse” monetary transmission. Absent frictions and risk premia, dispersion would be zero. In practice, there is quite a bit of dispersion. These spreads are driven by liquidity, credit, term and other fundamental risk premia that vary over time. Effective monetary transmission does not require zero dispersion—instead, it requires that market rates respond appropriately to changes in the federal funds rate, and that the relationships among market rates be reasonably predictable. Put another way: if some change in market structure causes rates across markets 6 / 13  BIS central bankers' speeches  to be more dispersed, but every traded rate within each money market moves up by exactly 25 basis points following a 25 basis point increase in the federal funds rate, is transmission really worse than it was before the structural change?
Among others, the finance industry is one with many untapped opportunities. Currently, a wide group of people in our countries still needs a better access to finance and there are still lots of demand for financial services to be met – be they savings, loans, insurance products, or payment services for both domestic and crossborder transactions. By applying the airline industry’ experiences for policymakers, let me lay out five key conditions necessary to developing domestic financial systems and nurturing financial connectivity in the CLMVT in the periods ahead. Analogous to the “Open Sky Policy”, the first factor is to promote domestic financial liberalization policy and a well-integrated regional financial system. The financial liberalization policy should aim to lessen the degree of domestic financial repression, thereby strengthening financial institutions’ performance, and broadening their offer of financial  2  BIS central bankers’ speeches  products and services. This can be done along with the policy to enhance financial connectivity by promoting the presence of capable players with regional focus. Under our mandate, the Bank of Thailand aims to promote financial connectivity through more connected banking networks and more integrated payment systems. Under the ASEAN Banking Integration Framework, countries in the CLMVT should gear up efforts to strengthen regional banking networks, which will serve a diverse range of businesses and local people to gain more access to high quality banking services at fair prices.