While we welcomed greater engagement of emerging economies in the global regulatory reform process, such as in Basel Committee and various working groups, the key success factors are these: First, our inclusiveness at the policy development stage rather than just implementation stage, and secondly, on the inclusiveness in the supervisory colleges of global banks which are systemically important to our domestic financial system. Ladies and gentlemen, In closing, I would like to iterate that, the success in meeting these challenges, rests as much with us, as with the banking sector. Thus far, we are pleased with their efforts in strengthening risk management, not only in the process, but more importantly, the culture. Often, we are asked why our banking system has managed to remain resilient, while those with more sophisticated risk management system have suffered. I believe the key is, first of all, there is no gap between the risk profile of our banks and their risk management system, as well as our risk-based supervision. Our banks business model is less complex, mobilizing local and stable deposit, for on lending to domestic borrowers, with small investment portfolios, mostly in plain vanilla Thai government bond. They have very little exposure to less familiar risk such as overseas assets and complex products. But looking ahead, things will not stay this safe if both banks and the Bank of Thailand do not work closely to continuously strengthen risk management.
Currently, we have a semi-automated real-time delivery versus payment (DVP) system in place. It is a stop-gap measure but it serves as an important infrastructure in the settlement of the scripless government bonds. The system, when fully developed, will be supplemented by the intraday liquidity facilities and queuing mechanism, employing the latest digital signature technology to ensure secured and smooth real-time delivery and payment transactions. We are entering an era when capital flow across borders can only become more volatile than in the past. And we still have fresh memories of how disruptive it was before the crisis. In fact, it was a major cause of the crisis. How do we go forward? How do we guard against this? The work on the new International Financial Architecture seems to be very much lacking in the area of the behavior of key players, especially the highly leveraged institutions. In the eyes of the large  3  BIS Review 30/2000  Western countries, such issues have somewhat lost their urgency since the event surrounding the Long-Term Capital Management (LTCM) left the headlines. In the absence of such rules, it appeared that emerging markets can only look to our own selves for protection. We have to help ourselves. A well functioning bond market is an important tool in this respect. It will act as a reservoir that absorbs capital inflow, and channel it to good use.