New body gets BoT nod

New body gets BoT nod

Fiscal and monetary committee advances

Bank of Thailand governor Veerathai Santiprabhob
Bank of Thailand governor Veerathai Santiprabhob

Bank of Thailand governor Veerathai Santiprabhob has thrown his support behind the government's plan to form a fiscal and monetary committee, saying the new body would reinforce cooperation among related agencies to better handle rising global economic uncertainties.

The imminent committee will not have any impact on the central bank's monetary policy decision-making, leaving its independence intact, he said.

Last week, Deputy Prime Minister Somkid Jatusripitak announced the formation of a fiscal and monetary committee, saying the government did not aim to interfere in the central bank's monetary policy nor its independence.

But some fear that the committee would clip the central bank's wings in managing monetary policy, which is an important check on government-controlled fiscal policy.

The committee is likely to be an advisory team tasked with facilitating information sharing and helping policymakers steer economic policies in the same direction, Mr Veerathai said.

Collaboration among related economic bodies, including the finance, commerce and industry ministries, is needed for several dimensions such as the imminent economic stimulus package and financial measures governing financial institutions, he said.

Mr Veerathai said financial stability remains the central bank's focus and needs to be strengthened to contain fragility amid the low-rate environment.

All instruments, including monetary policy and financial institution supervision through both micro and macro measures, are needed, he said.

The Monetary Policy Committee last week made an unexpected policy rate cut of 25 basis points from 1.75% to 1.50% to prop up the country's economy, which is expanding at a slower pace than earlier forecast.

The economy is facing both external and internal headwinds from the intensified trade spat between the US and China and ebbing domestic consumption and investment.

The central bank is encouraging financial institutions to pay more attention to environmental, social and governance issues to build up consumer confidence in financial institutions and strengthen the system in the long run, Mr Veerathai told the Bangkok Sustainable Banking Forum on Tuesday.

The central bank collaborates with financial institutions to deliver policies through several campaigns such as basic banking accounts, featuring fee-free deposits and no minimum balance requirements, giving people access to basic financial services, he said, noting that 1 million accounts have been opened since the services became available in 2018.

Industry Minister Suriya Juang- roongruangkit has encouraged local business operators to exploit the stronger baht by importing machines and equipment at lower cost.

Higher imports would also help weaken the baht, Mr Suriya said after discussing the matter with Mr Veerathai on Tuesday.

The Industry Ministry will provide support for imports through Board of Investment (BoI) promotions.

"The ministry will discuss the measure with the BoI again," Mr Suriya said. "Deputy Prime Minister Somkid Jatusripitak is set to visit the Industry Ministry tomorrow, and the issue will be discussed at the meeting again."

Promoting know-how to strengthen the competitiveness of small and medium-sized enterprises, mainly outside Bangkok, is another method to build up business buffers while the baht is volatile, he said, adding that the Industry Ministry would support such measures through the Industrial Promotion Department.

At present there are several educational campaigns to support SMEs.

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