Government may limit central bank mandate

Government may limit central bank mandate
Bangkok Post (9 October 2007)

The Finance Ministry is prepared to amend the draft Currency Act to limit the authority of the Bank of Thailand in managing the country's international reserves, Finance Minister Chalongphob Sussangkarn said yesterday. Dr Chalongphob confirmed that the Finance Ministry would withdraw the draft amendment for further modifications in light of complaints voiced by followers of respected monk Luangta Maha Bua. The ministry had been scheduled to submit the new Currency Act to the National Legislative Assembly for a first reading last week, but the consideration was delayed for time reasons. A re-reading of the bill had been scheduled to take place in the NLA tomorrow. The bill is aimed at giving the central bank greater flexibility in managing the country's foreign reserves by expanding the types of assets counted as reserves and allowing regulators to undertake more sophisticated transactions in the financial markets. Accounting rules would also be changed to separate unrealised and realised gains and losses to improve transparency in financial reporting. But followers of Luangta Maha Bua have protested strongly against the bill, claiming that the amendments would allow the central bank to undermine existing controls on the country's foreign reserves. ''We will limit the authority of the central bank, which is much broader under the new law, to reassure those who lack confidence in the bank,'' Dr Chalongphob said, adding that the revised draft would go to the NLA at the end of the month or in early November. This is not the first retreat by the government in the face of public opposition against the Currency Act changes. The Finance Ministry earlier eliminated a clause sought by the central bank allowing greater flexibility in transferring assets across different accounts to be counted as reserves used to back up currency in circulation. Dr Chalongphob said that eliminating section 16 of the draft, which deals with management authority over the country's reserves, would not hinder operations for the central bank, though there would be less flexibility than originally intended.