BIS central bankers’ speeches  3  Following our December 2008 meeting, the FOMC announced that it had cut the target range for the fed funds rate to 0-to-1/4 of 1 percent, and being thus “zero bound”, we floated the idea of purchasing longer-term Treasuries in order to provide further monetary accommodation (when we buy Treasuries or MBS and agency debt, we put money into the financial system, substituting for further interest rate cuts). On March 18, 2009, we announced additional purchases of up to $ billion of agency MBS and up to $ billion of agency debt, plus purchases of up to $ billion of longer-term Treasury securities over six months. That day, our balance sheet was marked at $ trillion.
Allow me to highlight some of our resilient features: •  We continue to have a strong current account position with the current account last year registering a surplus of 9 percent of GDP, or around 35 billion US dollars, thanks largely to a substantial saving on energy imports. •  Our international reserves have been at a healthy level, standing at three times of the short-term external debt we hold. •  Our capital markets are relatively less exposed to the risk of capital flight, with foreign holdings at less than 9 percent of the Thai government and Bank of Thailand bond outstanding, compared with more than 30 percent in some other emerging markets in the region. •  External debt of the Thai corporate sector has been relatively low, hovering around 13 percent of total corporate debt. And, most of the external debt belongs to large corporations which have used the proceeds to finance their investment aboard and are able to manage their exchange rate risks sufficiently well. As a result, the currency mismatch does not pose a threat to the Thai corporate sector, unlike what they experienced during the 1997 economic crisis. Taken together, the strength of Thailand’s external position on many fronts has helped the Thai economy withstand the recent global financial turmoil, and would continue to provide cushions against possible external shocks in the future. Nevertheless, it would be a mistake to be complacent with where we stand and fail to anticipate greater challenges ahead.