Prasarn Trairatvorakul: Bank of Thailand’s policy direction in 2012 Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Bank of Thailand, Bangkok, 27 January 2012. *  *  *  Good afternoon, honorable guests and members of the press, 2012 is a special year because it is the Bank of Thailand’s (BOT) 70th anniversary, a mark of extensive experience for an institution. Faced with numerous challenges to monetary policy and financial institutions policy implementation, the BOT has through the past 70 years upheld the institutional value that our policies must be based on sound principles, yet embracing enough flexibility to accommodate the changing environment. Our ultimate goal is to promote Thailand’s long-term economic and financial stability. Our policy direction in 2012 will continue to reaffirm our long-held determination to strengthen the country’s economic resiliency and the well-being of the Thai people. Notwithstanding short-term economic obstacles that have weighed on current sentiments, the Thai economy’s main challenge has remained the same since my address last year. This major challenge is how we all can become more proactive since idleness during a time of rising competition could easily cause us to fall behind. As such, all parties should always be ready to improve oneself and to prepare for uncertainties that may occur in the future. In this same spirit, the BOT has modified our strategy to fit the changing environment and is willing to work with all parties to ensure that the Thai economy can continually expand in line with its potential.
Monetary policy and exchange rate policy With regard to the implementation of monetary policy, the BOT will continue to safeguard economic stability mindful of the economic cycle, especially the risks arising from global economy. This year, inflationary risks look to moderate from last year. Therefore, monetary policy can shift focus to the promotion of private sector’s growth and ability to cope with elevated uncertainties as a result of more volatile global environment. At the same time, exchange rate management will remain adhered to the principle of flexible movement in line with economic fundamentals. Along with that, the BOT will continue to push forward the “Capital Account Liberalization Master Plan” to allow Thai entrepreneurs and retail investors more flexibility to manage overseas investment. It is hoped that, under this master plan, foreign exchange regulations will be streamlined to help reduce the cost for Thai investment abroad as well as develop domestic financial markets. Initiatives on promoting outbound investment will include expanding investor types and ceiling limits, relaxing existing rules and regulations, and increasing flexibility for risk management. Nevertheless, the BOT will maintain adequate safety valves in line with varying emergency scenarios. In this regard, we expect to organize a public hearing on the “Capital Account Liberalization Master Plan” to gather inputs from all key stakeholders. Financial institutions policy For financial institutions policy, the BOT aims to increase the competitiveness of financial institutions while ensuring continued systemic soundness, promoting efficient risk management, and ensuring their desirable role as effective financial intermediaries.