Taking this to the monetary policy context, expectations for disruption or volatility from an substantial change in the Federal Reserve’s operational posture, even if totally unfounded, could bring about disruption, as the holders of those expectations act to protect themselves or profit from what they believe is likely to come. The solution is to try to avoid generating such expectations for disruption to begin with, by acting gradually and predictably. 10 / 15  BIS central bankers' speeches  Another potential explanation for the relative stability of longer-term rates this time around is that balance sheet news this year, taken together, just hasn’t been all that surprising to market participants. Panel 6 shows market participants’ expectation for the level of the federal funds rate that would prevail when the reinvestment policy first changes, as well as expectations for the date of that change. As can be seen, balance sheet normalization started slightly earlier than expected, both in rate terms – it began with the federal funds rate at 1.16 percent – and, more notably, in terms of the absolute date. But at the same time, earlier in the year, many market participants had seen decent odds that the Federal Reserve would reduce its balance sheet more quickly with a full-stop end to reinvestment. Panel 7 shows the decline in expectations for both no change in Treasury reinvestments and a hard-stop in them.
The minimum is a system that allows the sharing of negative information or some kind of black lists. But one should quickly migrate towards pooling and sharing positive information as well. A well functioning credit information system is not harmful to the consumers. Instead it enables the borrowers on the margin to obtain credit, those who would have been refused in its absence. In Thailand we already have two credit bureaus operating, and the Credit Bureau Act will soon be enacted to govern their businesses. Third, the need to protect the consumers. The charges and expenses levied against them should be made clear and easy to compare between various issuers. Interest rates should be declared as effective annual rates and sufficient lead time should be allowed and communicated to consumers before changes in terms and conditions come into effect. In Thailand, we are planning to set a uniform standard for the whole industry regarding such things as interest free periods, the setting of due dates and calculation methods for past due balances. Finally, if internet transactions become prevalent or poised for rapid growth, there is the need to define its proper legal framework. On this issue, we have just passed the relevant laws and are in the process of drafting the subsidiary regulations at ministerial level. At the micro level, and this is your direct responsibilities, card issuers have to put in place a good system of risk management.