My second congratulation is also for Governor Paul Acquah for having achieved the Central Bank independence. I have noted that the Bank of Ghana was established in 1957. The Bank of Thailand was established in 1942 and we have not managed to gain independence through legal means yet. So, you are one up on us. Ladies and Gentlemen, the issue of “Central Bank Independence and Monetary Policy” is very much closed to the heart of all central bankers, and I am very happy to be able to share some thoughts on it. In Thailand's case this issue has been much discussed among all concerned throughout the 60 years period since the Bank of Thailand's establishment in 1942. One of the most famous governors of the Bank of Thailand and certainly the longest serving Governor (more than 10 years) had this to say about central bank independence and I quote “…If the policy in question is so profound that it might undermine principles or lead to catastrophe, the Central Bank Governor may not only voice his disapproval against it, but he also has the ultimate prerogative of resigning from the governorship”. Dr. Puey Ungphakorn was an outstanding Governor who gave great importance to the Bank of Thailand to carry out its functions as an independent institution free from political and governmental domination, undaunted by any influential powers-that-be. For the sake of his country-and using the delicate art of being a central banker, Dr. Puey protested against the government whenever it did not act righteously.
Dr. Puey believed that the government must have faith in the central bank in providing benefits for the country as a whole. The Governor and senior management should have enough courage to voice their critical, even dissenting opinion when such an action is necessary. His view was that the Governor and his senior management cannot be saints, but must carry out their work adhering to the principles of honesty and integrity. Neither can they act indifferently, because when it is necessary to reprimand the government, they must do so. Dr. Puey was determined to protect its officials from political interference. He issued regulations prohibiting Bank of Thailand officials to stand for political office or write articles on politics, which are still in force today. I totally agree with what Dr. Puey had thus said and practiced without fail. However, since Governor Puey left the office at his own will to concentrate on another job which he loved dearly, that is, rector of Thammasart University, we have had nine governors over a period of almost 30 years. Out of this nine, only two retired from the office, the other seven were either fired or pressured to leave the post by the Government for some reason or another and in most cases the causes of removal had nothing to do with their performance in conducting monetary policy. BIS Review 53/2002  1  How could this have happened?