If the increase in petroleum revenues is used domestically, this would correspond to almost all the annual growth in the mainland economy in a normal year. If the private sector of the economy is also expanding, and the economy is already close to its capacity limit, this policy would swiftly lead to strong pressures on economic resources. This would result in a rise in wages and prices. This policy would also lead to unstable conditions in the foreign exchange market. When oil prices then fell again and central government expenditure dropped, the economy would experience a very strong contraction. The Government Petroleum Fund was established in 1990 with a view to safeguarding long-term considerations in the use of petroleum revenues. The idea behind the Petroleum Fund is that the cash flow from an increase in the oil price should accrue to the Fund and be invested abroad and that the increase in the oil price should not affect the wider budget. Thus, rather than affecting the domestic economy, the increase in the cash flow would be invested abroad through the Petroleum Fund. Similarly, a fall in the oil price would not affect the domestic economy, but would result in lower accumulation of foreign assets. By building up the Fund, the aim of ensuring that several generations will enjoy the benefits of our petroleum wealth is also taken into account. In March 2001, the fiscal guideline and new guidelines for monetary policy were introduced.
And with the natural trade links and the people-to-people relations, there is a role for Thai banks in the payments and remittance services. These areas may not be commercially viable for global banks if the scale of the transaction is deemed too small. But for Thailand, such basic services can help support the robust growth of cross border trade and investments which are important for rural development and income distribution. •  With the fundamental trend where Thai businesses start to diversify investment and production base to neighboring GMS countries, it is natural for Thai financial institutions to follow their clients. Thai banks therefore have an important role in partnering Thai and GMS corporates. Areas such as project evaluation, business-set up, cross-border financial transaction are areas where the local know how matter and where Thai banks can meaningfully contribute. Through the vertical integration of these corporate finance services, Thai financial institutions naturally become an intermediary between Thai business and our GMS counterpart. As clients organize themselves around a regional supply chain, Thai banks become a natural partner to bring GMS business and investment to Thailand. Thai banks and their GMS correspondent banks or joint venture partners have a niche market advantage. They have close business links, geographical advantage, and access to funding in local currencies which are the natural means of payment for intraregional trade.