One reason for this capital buffer may be the introduction of the Basle II regulations in 2008/
2009 which is expected to increase required capital for Thai banks. In 2006 the central bank is
expected to release appropriate guidelines for the banking sector to prepare. However, prudential
regulation is only one among the seven Basle core principles. There is still room for improvement
with respect to consolidated supervision, to international financial reporting standards, to a
general regulation of more complex derivatives and with respect to management and regulation
of market risks in general. Authorities and practitioners are aware that the implementation may
require years to become effective.