We also understand that financial development must be underpinned by a solid foundation suitable for each country’s economic, social, and political context. The speed of liberalization and change must not be too fast that it overtakes the fundamental preconditions such as strong financial laws, the ability to regulate and manage risk and the financial literacy of people. Failure to satisfy these prerequisites risks creating imbalances in the macroeconomy that cause financial instability. With this awareness and the experience still fresh in our mind, I believe we are a natural and understanding partner in the development process. Our banks can relate to and respect the local context in the GMS countries. They can adapt to it as well as share the experiences. Joint ventures, correspondent banking, as well as regulatory and supervisory cooperation are ideal for capacity building. Indeed, close proximity as well as common language and cultural heritage also help relay the experiences. Lastly, the task of financial development would not be complete without the supporting infrastructures, institutional set up, and risk management system. This entails but is not limited to (1)  the adoption of a robust regulatory framework to ensure prudent conducts of financial intermediaries that foster an open and competitive regime;  (2)  appropriate monitoring and policy tools to detect occasional imbalances, flag early warning signals and encourage quick remedial actions;  (3)  talent training and development to manage risks and drive continuous advancement of the financial sector and;  (4)  good governance, predictability and ease of doing business.
•  Thailand is therefore poised to assume the role of a connector – by acting as a link or point of reference for the entry of global banks into the subregion. This is underpinned by our established financial platform, familiarity with the local business practices, as well as close cultural ties among our people. •  Of equal importance is our own inherent understanding of the challenges of developments faced by GMS, through our own experience. This is particularly important in two aspects. •  First, Thai financial institutions are still focused on core financial intermediary functions such as payments services, deposit, and loans which serve the basic needs of the real sector. Thai banks are inclined to serve the needs of the real economy rather than in speculative types of businesses such as proprietary trading. For these reasons, Thai banks are also less complex, with good risk management  2  BIS central bankers’ speeches  and strong capital base. Regulators in Thailand and GMS neighbours can understand fairly well the business model of our banks and their risk. We believe that given the lesson of the current global crisis, this type of bank model makes good sense for home and host regulators. •  Secondly, both regulator and the banks in Thailand could well remember the bitter experience of our own economic and financial crisis in 1997. We understand that financial liberalization needs to be properly sequenced.