Government wants to restrict central bank
Once again the government is attempting to influence the Bank's policy Thailand (Bone). Previously, the government passed on a debt from its own budget to the central bank; now she wants to replace the Chairman of the Board of Directors with former Vice Prime Minister Virabongsa Ramangkura.
The government reportedly wants to seize the central bank's foreign reserves to finance infrastructure investments and to ease the bank's interest rate policy. Virabongsa has previously advocated drawing on US$178,6 billion in reserves. Minister Kittiratt Na-Ranong (Finance) also favors a weaker baht against the dollar.
Session term expires
The current chairman's term of office expires on 25 April. The BoT wants to reappoint him. The term of office of two directors is also expiring. In their place, the minister wants, among other things, to appoint a former employee of former Prime Minister Thaksin. There is a good chance that the minister will get his way, because the selection committee largely consists of representatives of the Ministry of Finance.
Financial analysts criticize the government's interference in the presidential nomination. Until now, the bank has always been able to appoint a chairman independently of the government.
'Conservative interest rate policy'
Secretary Kittiratt has repeatedly called for an easing of the bank's conservative interest rate policy. The central bank currently applies a rate of 3 percent with the aim of curbing inflation. The International Monetary Fund has complimented the bank for this. Nevertheless, the minister wants to reduce the rate by 1 to 2 percentage points to boost the economy.
Earlier, the government and the central bank were also at odds when they transferred a debt of 1,14 trillion baht from their own budget to the BoT to get rid of interest payments. BoT Governor Prasarn Trairatvorakul has unsuccessfully opposed this as well as the launch of a 300 billion baht soft loan package.
It is better that a central bank, the monopolist's umbrella body for creating money out of thin air, be controlled by the government than by private individuals.
Fluminis,
Still apparently not fully understood how a Central Bank is supposed to work? A CB should steer the economy in an independent manner. The fact that Yingluck just transfers an amount of TBH 1,14 billion shortfall in her budget to the BoT is over. How do you come up with such a thing! Kind of like if I just transfer any debts to you for a while.
It is understandable that the government has a say in BoT, but if that is only used to commit a bank robbery of approximately USD 178 billion (!) then that is at least questionable. In plain Dutch, this leads to pottering instead of just putting your budget in order.
In short: a very dangerous thought.