·  Debt restructuring as well as some positive environment in the economy, especially buoyant export growth in 1998 until the first half of 1999, together with the transfer of NPL to AMC and write-off alter full provisioning, helped NPL to decline from the peak of 48% of credit in mid 1999 to around 18% presently. The current challenges Against this background of achievements, I would now like to turn to the current challenges. The first is the challenge facing monetary policy. Key concern of macroeconomic policy in Thailand at this time is the weak domestic economy. This concern has been met by an accommodative stance of fiscal and monetary policies. But the external environment in which the Thai economic policy operates has changed considerably since the end of last year. The global economy is now slowing with possible substantial impact on the growth performance of the regional economies and on financial markets. Because of the strong dependency on exports, Asia will be one region most affected by the slowdown. Many countries have revised downward their export and growth estimates. Some have seen increased pressure on the external current account and the exchange rate. A key risk to the current environment is the global slowdown coinciding with a period of increased market volatility. This increase in market volatility could come about following possible further repricing of financial assets in the key markets abroad.
·  Third, to work with the management of the state banks and commercial banks to facilitate their resumption of lending without compromising the banks’ own risk management and the Bank of Thailand’s own supervisory standards. On our part, the Bank of Thailand has improved the credit information system through fostering the establishment of credit bureaus, which provide the much-needed infrastructure for the resumption of new credit. Meanwhile, we will continue to adhere to the best practices in prudential standards, and look to further improving the standards. Let me now turn to the third challenge: Rebuilding our financial architecture. This is an area that the Bank of Thailand takes leadership role to strengthen the soundness and efficiency of the financial institutions. Our leadership must lead to outcome which makes practical sense, measures up to international best practices, and must be market-oriented and suitable to Thailand. So far, we have laid down necessary groundwork to tackle short-term difficulties, such as the persisting non-performing loan problems, the lack of credit growth, or the restoration of financial sector soundness. Long-term prosperity however requires more. It requires a new financial architecture and corresponding market infrastructures to foster competition and efficiency while ensuring a nonrecurrence of past problems. Specifically, in the world where financial innovations, economic integration, and technological advancements bring nations and markets closer and define a new paradigm for competition for financial service industries, the rebuilding of our financial architecture becomes vital for our long-term successes, if not survival. Given such a challenge, which direction are we heading?