There is a danger associated with this conviction, if the widening gap between what is expected of central banks and what they can realistically deliver end up undermining central bank credibility. To maintain public trust in the central banks, it is important to clearly lay out what monetary policy can and cannot achieve. I would like to highlight three areas where monetary policy limits in Thailand are particularly binding at present. Understanding these limits would also help explain our monetary policy actions. 1. Single instrument, multiple objectives  The first limitation has to do with the fact that multiple objectives cannot be targeted using one instrument, namely, the policy interest rate. This is a key reason why most central banks in the world today typically focus on a single primary objective of price stability, which is crucial to a well-functioning market economy and is what monetary policy has most control over. There are of course other equally important policy objectives, in particular financial stability, as recent global crisis clearly illustrated. The “flexible inflation targeting” is precisely designed to allow the central bank to stabilize not only inflation but also to mitigate the risk of a build-up of financial imbalances. Endowing central banks with more policy tools to achieve this additional objective has gathered a lot of support in international policy forums. The demand for monetary policy does not stop there, however.
Zdenek Tuma: Present and future challenges for the Czech National Bank Introductory remarks by Mr Zdenek Tuma, Governor of the Czech National Bank, at the CNB Conference: ”Challenges of EU Accession”, Prague, 1 April 2003. *  *  *  Ladies and gentlemen, dear colleagues, It is my pleasure and honour to welcome you here to the Czech National Bank for what I believe will be a very interesting policy-oriented conference. The Czech National Bank is this year celebrating a decade of its existence as the central bank of the Czech Republic. When we look back at that period, we can see many difficult challenges that we had to face in order to facilitate the economic transition and later on to bring our operations into line with best international practices. This experience is similar for all other central banks in the post-communist EU-accession countries. But I do not want to speak about those past challenges today. They are mostly behind us, and our situation is now very different. Therefore, I would like to be forward-looking as any modern central banker should - and to speak about the challenges that we all share at present and, most importantly, about those that lie ahead. As you all know, the accession treaties will be signed in two weeks. This will be a symbolic milestone in the EU integration process, which has been going on in the economic and political sphere for many years.