Bank of Thailand governor Prasarn Trairatvorakul voiced his supports to international regulatory consistency in light of the more interconnection among global financial markets.
In his special remarks at the G20 Agenda under the Australian Presidency Conference today, he said I wholeheartedly support the Basel Committee’s
Regulatory Consistency Assessment Programme (RCAP) which includes the peer review process to assess the consistency and completeness of the adopted standards among members, and the work on consistency of risk-weighted assets (RWAs) across banks. I have heard that these works have been quite constructive in
that the peer review process has encouraged a more timely and comprehensive adoptions, and the work on RWAs consistency would lead to refinements of model-based frameworks.
"I believe that promoting greater international regulatory consistency is beneficial in many aspects. The current regulatory reform is comprehensive in design.
Consistency of implementation, along with supervision, is utmost important aspect in order to achieve prudential objectives as intended. Regulatory consistency helps
ensure system-wide stability, improve efficiency of capital allocation, as well as support cross-border trades. In addition, it provides level playing fields thus reducing
regulatory arbitrage among financial service providers. It also enables comparability thus enhancing market mechanism to benefit financial service customers and
investors," he said.
He noted that regulatory consistency does not mean uniformity, where one rule fitting a market can fit others. He also praised the Basel Committee's effort to achieve overall consistency with some flexibility to suit local context.
"Countries and markets across the globe are at widely different stages of development, and also at different stages of business and financial cycles. Therefore, these are very good reasons why we should not have a single rule book applying the same way regardless of national circumstances," he said.
He said the road to achieve this could be bumpy and as such, it requires commitment from all global leaders.
(The full speech: http://www.bot.or.th/Thai/PressAndSpeeches/Speeches/Gov/SpeechGov_20Feb2014.pdf)