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He was speaking at an international conference on "Asian Financial Outlook: The next 10 years."

Pyvis referred to the 1997 financial crisis, saying it was unavoidable.

"The condition was rife. If one were to look for any indicator for any financial crisis in the future then consider the following factors, which led up to the crisis."

First there was inappropriate economic policies set by the government that is the bedrock of it all. Then there were poor decisions made by commercial banks and businesses. Poor supervision from central bank, such as the misuse and depletion of national reserves to fight currency speculation from foreign funds, also accelerated the collapse, he told th audience.

Finally, top this with poor investment planning from individuals, for instance the rampant short-term property speculation, then one has a recipe for a bubble economy.

The fall of the Berlin Wall too has exacerbated the plight. Asian economy, which was all then the benchmark for emerging economies, had serious contenders from these

former communist countries.

The decline in demand for their goods and services has dealt a severe blow to

these export-driven Asian economies. In some cases, this quickly led to current account

deficits - which, for example, in Thailand amounted to 8% of GDP in 1996.

Pressure was then applied on those pegged exchange rates.

It was a mistake that central banks then thought that they could defend their

currencies when there was an over-reliance on foreign funds. Many Asian countries had inadequate domestic demand, inadequate investment into productive sectors of its

economies, which could have encouraged and developed domestic demand.

Destruction of domestic savings was therefore inevitable.

The devastation, the destruction of incomes and savings, has left many all the

much wiser. It alters their attitudes to risk taking, to borrowing, to investment and

to equity markets, at a personal, corporate and governmental level, making the

return to prosperity all that more difficult.

The first lesson learned is how the economies, businesses and banks, should deal

with floating currencies. How for instance, the disintermediation of the banking

sector is important for the corporate sector's ability to source capital at market rates

that reflect the true cost of capital.

If central bankers are to have an effective interest rate management tool, if

corporations are to have the availability of long term debt, and if savings are

to be manage properly for the long term, a mature bond market is essential. Capital is

to be provided with interest rate indicators of real returns over time on offer in an

economy.

Rules and regulation, with capable supervisors, must allow for a robust

financial services sector, underpinned by a strong economy, to flourish.

Thailand has demonstrated post-crisis, the Kingdom has a huge comparative

advantage in its agricultural sector which had not been fully exploited, he said.

Full speech of Pyvis : How to Detect a Looming Crisis