Thailand has witnessed enormous changes over the past four years: it ended a period of unprecedented economic growth, entered into the worst financial crisis in the country.s history, and is now working to build a sustainable economy based upon a safe and sound financial sector.

Prior to 1997, management of financial institutions and the Bank of Thailand itself did not fully and accurately identify structural weaknesses that pointed to an impending financial collapse. A positive side effect to come from a crisis such as the one experienced in Thailand is that the misguided practices and policy weaknesses become very readily apparent to everyone. Having had these weaknesses so poignantly identified, the Bank of Thailand has initiated an ambitious program of financial sector reform to prevent a similar crisis from occurring again.

It is often said that a country can have a strong banking system and a weak economy, but it can never have a weak banking system and a strong economy. It follows then, that the Bank of Thailand, as caretaker and overseer of the banking system, must be able to effectively supervise banks to ensure their safety and soundness. Measures aimed at the Bank of Thailand's supervisory policies, procedures, and practices as well as the activities of banks and the financial sector are being taken to achieve the goal of stability in the banking system.

I am pleased to present to you the Bank of Thailands Supervision Report 2000. The Report presents measures taken to stabilize the banking system over the past four years and an assessment of where it stands today. It also identifies the steps that the Bank of Thailand has taken to strengthen the supervision process and describes the supervisory strategy for the coming years.

M.R. Chatu Mongol Sonakul
Governor,
Bank of Thailand