Ling, Shanice E. Rivera, Karen Nicole D.

2-3 Central Banking

% November 28, 2011

I.

Brief History of Thailand

It is believed that the earliest Thais migrated into the region of Southeast Asia all the way from southern China at some point in 10 A.D. The archaeological site at Ban Chiang is regarded as an important foundation of Thailands prehistoric years. Various artefacts found in this site dates back as early as 3600 B.C When Thailand gained sovereignty from the Khmer Empire during the 13th century, Pho Khun Si Indrathit founded an independent empire. It was a glorious and joyful period for the Thais until King Ramkhamhaeng died in 1365. At the same time, another Thai state also exists in the northern region of Lanna. The Kingdom of Ayutthaya began its grandeur after the fall of Sukhothai with its first monarch, King Ramathibodi I. It has a total 5 dynasties with 33 kings and lasted until 1767 when Burmese armies attacked the capital. For a short period of time, Thailand was under the rule of General Taksin until the first king of the Chakri dynasty, General Chakri as Rami, succeeded and established Bangkok as the new capital.

In 1932, constitutional monarchy became the official government of Thailand through the Siamese coup d'tat. It was during this period when King Prapjadhipok gives up the throne to his 10-year old nephew Ananda Mahidol who mysteriously died in 1946. Thailands new type of government made a lot of changes specifically with the military command, notably led by Luang Phibunsongkhram and Sarit Dhanarajata. The 1973 revolution resulted to a short and unstable period of democracy in Thailand. During the 1980s, Thailand was under the ruling of Prem, a democratic strongman who had stored parliament politics. In 2001, the democrat Thai Rak Thai party came into power led by Prime Minister Thaksin Shinawatra. In 2006, a new coup d'tat was successfully launched by Thailands Army Commander-in-Chief Lieutenant General Sonthi Boonyaratglin. II. History of Central Bank in Thailand

The Bank of Thailand was first set up as the Thai National Banking Bureau. The Bank of Thailand Act was promulgated on 28 April 1942 vesting upon the Bank of Thailand the responsibility for all central banking functions. The Bank of Thailand started operations on 10 December 1942. The Bank of Thailand Act, B.E.2485 was later amended in order to put emphasis on Bank of Thailands social responsibility, to create a mechanism to guard against economic crisis, as well as to set up Bank of Thailands decision making process to ensure good governance and transparency in the organization. Members of the public will be able to audit and increase the understanding

of the Bank of Thailands operations. The Bank of Thailand Act, B.E.2551 came into force with effect from 4 March 2008.

A. Objectives: Bank of Thailand The bank of Thailand's objectives is to provide a stable financial environment for sustainable economic growth in order to achieve continuous improvement in the standard of living of the people of Thailand. Bank of Thailand operates as a central bank in Thailand. It offers monetary policy instruments, operational notices, and debt securities, as well as provides bond price calculation, debt security, cheque clearing system, and retail fund transfer system services.

B. Functions: Bank of Thailand The Bank of Thailand serves as the central bank for the country. Tracing its roots back to 1939, it serves in a variety of central banking functions, including promoting monetary stability and policies, supervising financial institutions, providing banking facilities to the government and financial organizations, managing national reserves, and printing and issuing banknotes. Headquartered in Bangkok, Bank of Thailand operates three regional offices which manage banking facilities, supervise foreign exchange control, and monitor economic conditions in their respective regional areas. Bank of Thailand also has international representation in New York and London.

C. Roles and Responsibilities: Bank of Thailand According to the Bank of Thailand (BOT) Act B.E.2485 as amended by B.E.2551. y Print and issue banknotes and other security documents The BOT prints and issues banknotes and other security documents under the enforcement of the Currency Act and has sole rights to print and issue banknotes in the Kingdom. y Promote monetary stability and formulate monetary policies. The BOT implements monetary policy as specified by the Monetary Policy Committee as follows : mobilizing the deposits, determining the interest rate for loans to financial institutions, trading foreign exchange and exchanging for the future cash flow, borrowing foreign exchange in order to maintain the monetary stability, borrowing money in order to implement the monetary policy, trading securities as necessary and exchanging for the future cash flow in order to control the money supply in the countrys financial system, and borrowing or lending the securities with or without returns. Manage the BOTs assets The BOT manages its assets excluding the assets within the currency reserve according to the Currency Act and invests such assets for returns by realizing the security, liquidity, return on asset, and management risks.

Provide banking facilities to the government and act as the registrar for the government bonds The BOT provides banking facilities to the government in terms of depository and lending facilities for the Ministry of Finance, acts as the custodian for the government, acts as the representative of the government for investment in assets and FX, trades and transfers the bill of exchange, securities, and share certificate, and controls and oversees FX. In additions, the BOT may provide banking facilities to the state enterprise or other government agencies. Moreover, the BOT acts as the registrar for the government bonds by acting as the government representative in purchasing and selling government bonds, paying principal and interest, or acts as the registrar of state enterprises, specialized financial institutions, or other government agencies. Provide banking facilities for the financial institutions. The BOT provide banking facilities for the financial institutions by acting as lender of the last resort for the financial institutions, acting as the custodian for the financial institutions, and ordering the financial institutions to report or explain about the assets, liabilities or contingent liabilities. Establish or Support the establishment of payment system The BOT establishes or supports the establishment of payment system, electronics clearing system, and administers such systems for safety and efficiency. Supervise and examine the financial institutions The BOT supervises, examines, and analyzes the financial status and performance, and risk management system of the financial institutions in order to promote financial institutions stability. Manage the countrys foreign exchange rate under the foreign exchange system and manage assets in the currency reserve according to the Currency Act. Control the foreign exchange according to the exchange control act. Since May 2000, the bank has targeted inflation, replacing money supply as the core of its monetary policy. Its current target for core inflation is 0%-3.5%. Interest rates are designated by the Monetary Policy Committee, which comprises three officials from the Bank of Thailand and four other experts.

D. Management of Central Bank of Thailand 1. Monetary Policy Group - Studies, analyzes, conducts research on and monitors the domestic economic conditions in terms of production, expenditures, monetary, fiscal conditions, foreign exchange, financial markets, balance of payment, foreign debts, foreign assets, international economic conditions, investment positions, and international reserves in order to propose the monetary policy and foreign exchange policy. - Evaluate the impacts of various measures on the economic stability and growth. - Conducts research on the topic relevant to the BOTs main duties in terms of economic conditions, financial institutions, and payment system. 2. Financial Markets Operations Group - Conducts monetary and foreign exchange policies related to both domestic and international markets. - Manages the international reserves and monitors FX operations. - Enforces the Exchange Control Act and Measure to prevent speculation on Thai Baht. 3. Financial Institutions Policy Group - Studies, analyzes, develops, and formulates the regulatory policies and criteria for the supervision of financial institutions and payment systems in compliance with the international standard in order to foster the stability, validity, and competitiveness of the financial institutions in the market. 4. Supervision Group - Supervises, examines, and analyzes the financial status, performance, and risk management system of the financial institutions in order to promote financial institutions stability. 5. FIDF Management Group - Implements the financial assistance measures in order to rehabilitate, stabilize and develop the financial institutions system under the government and BOTs policies. - Manages FIDFs assets and liabilities, and FIDF bonds. - Supervises the asset management policies and the financial institutions owned by FIDF. 6. Management Assistance Group - Supports various management systems of the BOT in terms of top management system, public relations, BOTs legal and litigation issues, BOTs museum, and BOTs library and archives.

7. Information Technology Group - Studies, analyzes, and recommends the policies of payment systems development and services of the country. - Provides depository facilities and fund transfer for the government agencies, commercial banks and other financial institutions. Acts as the government representative in managing the government and public organizations bonds. - Manages, gathers, compiles information, processes and analyzes the statistical data according to the international standard for the formulation of monetary and financial institutions policies, and dissemination to the public. - Carries out the BOTs computerization for efficiency and security according to the BOTs strategic objectives. 8. Strategic Capabilities Group - Plans the operations and management of the BOTs human resources, budget, and cost. - Develops and introduces organizational development approaches for the BOTs efficient and modernizes organization structure and work processes with appropriate level of workforce. - Oversees all matters related to the Banks accounts, receipt, payment, and financial statements. 9. Operations Group - Provides and carries out all general administrative services within the BOT. - Carries out all matters related to the BOTs security system. - Supervises the operations of the BOT regional offices. 10. Banknote Management Group - Issues and manages issues banknotes and other security documents under the enforcement of the Currency Act 11. Internal Audit Department - Undertakes internal auditing of the Banks operations to ensure that all departments in the Bank apply risk management policies and guidelines, possess efficient and effective internal control system, and operates according to the BOTs regulations, rules, and orders, and that all departments must be able to achieve the BOTs strategic objectives. 12. Financial Risk Management and Operations Department - Studies, develops, and recommends financial risk management policies, strategies, framework, and guidelines for managing the international reserves.

References: www.bankofthailand.com www.thefullwiki.com www.google.com