Our inflation forecast for mid-2011 is 5.4 percent. We expect non-food inflation to be lower than these figures. Figure 14: Inflation Forecasts* Forecast Range*  Output Gap  Uncertainty Band for 2008  End-Year Inflation Targets  12  Control Horizon  10 8 Percent  6 4 2 0 -2 -4 2011-II  2011-I  2010-  2010-III  2010-II  2010-I  2009-  2009-III  2009-II  2009-I  2008-  2008-III  2008-II  2008-I  -6  Source: CBT * The shaded region indicates the 70 percent confidence interval for the forecast. To sum up, although economic activity in the past quarter have evolved in line with our expectations, the significant increases in oil and processed food prices have led to an upward revision in our forecasts. The main message of the forecast is that preventing the materialization of potential second round effects and ensuring a steady decline in inflation towards the medium term targets, requires the monetary policy to maintain a cautious stance for a while. BIS Review 100/2008  11  Therefore, the path for the policy rates indicated above should not be perceived as a commitment on behalf of the CBT. I would like to once more emphasize that any new data or information regarding the inflation outlook may lead to a change in our policy stance. 4.
While efforts can be made to strengthen the legal and supervisory framework, from the financial industry perspective, strong understanding of risks and effective application of risk mitigation, including commensurate application of the AML/CFT measures are critical for the meaningful conduct and practices of financial institutions. This is particularly important in the conduct of CDD and transaction monitoring that will facilitate strong financial intelligence and reporting, to achieve the enforcement objectives. Authorities are committed to continuously enhance the current legal and supervisory framework. At the same time, financial institutions and other reporting institutions must be robust in their current practices and compliance. Technological Development Everyone agrees that technological advancement is moving at a pace far greater than ever before. For the financial industry to maximise the overall benefit of this progress, we must acknowledge both the advantages and the risks of such rapid technological advancement while keeping abreast with the latest innovations. New devices, software, applications and inventions will continue to emerge. The challenge is for us to keep pace and ensure that industry players understand the potential benefits as well as the risk they bear. As the financial industry evolves into digital, it is inevitable that the industry becomes vulnerable to various new threats and risk factors, especially in the domain of financial crimes and terrorism financing. In the effort to mitigate these risks, it is important that we embrace technology and use it to our advantage in order to strengthen our defences against financial crimes and terrorism financing.