This indicates that the Thai economy is likely to be much more resilient to the possibility of a taper tantrum than other countries. The second factor that indicates our resiliency is our banking sector. Our banking sector remains sound. Capital ratios are high with the BIS ratio at 20 percent, overall liquidity remains high, and provisioning levels are also high relative to NPLs. Thus, the banking sector remains highly liquid and very strong by most measures. The banking sector has also continued to function throughout the crisis by extending credits and we have seen credit growth in most areas with one notable exception which I will discuss later. This indicates that the banking sector is acting as a shock absorber and not a shock amplifier. The third area of resiliency is on public finance. Our public finances remain sound even though the public debt to GDP ratio has increased in line with other countries during the crisis. However, for Thailand, the public debt to GDP ratio remains reasonable, standing in the high 50s percent as a share of GDP. This indicates that the government has room available to engage in additional fiscal stimulus if it deems necessary. Furthermore, the ability of the country and the government to engage in more fiscal firepower includes the fact that 10-year borrowing rate on government debt remains relatively low. The government is able to borrow at less than 1.7 percent, a much lower borrowing cost than other countries in the region.
Her sacrifice is a real sacrifice, because she could have enjoyed that time for her own pleasure. In contrast, the government’s real sacrifice is just 5 units of money, the value of real resources it spent on producing the note. So the government enriches itself at the expense of the teacher who now has been given a note with real sacrifice of 5 units for getting eight hours of real services. This type of an unfair transaction is known in economics as an unequal exchange. Why should the teacher agree to this unequal exchange? That is because she is promised that she could acquire a real basket of goods and services worth of 1000 units of money with that paper. For instance, if a kilogram of rice is 1000 units, she is promised one kilo of rice in exchange for eight hours of her time. If this promise is kept, then, there is no problem. But, if such currency is excessively produced, too much money would chase after too little rice and the price of rice would go up in the market. As a result, when the teacher goes to the market, if the price of rice has risen to 2000 units of money, she could now buy only a half of a kilogram of rice. In other words, she has been forced to give up eight hours of her time for half a kilo of rice.