Bank of Thailand legal changes (18-05-2007)
Changes in monetary policy laws at the Bank of ThailandCentral bank backs amended legislation
PARISTA YUTHAMANOPThe Bank of Thailand supports the Finance Ministry's draft legal amendment that keeps the power to appoint and dismiss the governor with the cabinet, according to Charnchai Boonritchaisri, senior director of the Legal and Litigation Department.
The old draft gave a special committee, selected by the Senate, the power to change the governor in order to enhance the bank's independence.
The ministry has amended the draft to make the chairman of the central bank's court of directors an outside expert instead of the governor by position.
Mr Chanchai said the draft bill also transferred power from the governor to three committees: monetary policy, financial institutions policy, and payment system development.
Each committee will comprise two deputy governors and outside experts, with the central bank governor as chairperson.
A selection committee appointed by the finance minister will screen experts in each committee. It will include former permanent secretaries for finance, commerce and industry, the director-general of the Budget Bureau, the secretary-general of the National Economic Social and Development Board, the secretary-general of the Securities and Exchange Commission, the central bank governor and a dean of economics at a state university.
The bill says the monetary policy committee must have seven members, but minutes of its meetings do not need to be disclosed. The financial institutions policy committee has 11 members. The central bank needs to seek approvals before implementing any key policies.
The draft bill outlined the central bank's 11 missions with a core objective to maintain economic stability rather than boost growth, Mr Chanchai said.
He said the bill limits a governor to two five-year terms. The retirement age stays unchanged at 60 years, in line with the public sector standard.
It says the governor must disclose assets before taking the position and bans him from taking any positions in financial institutions for at least two years after leaving office.
The bill also expands the scope of official reserve investment to include new financial products such as debt instruments issued by international agencies.
The bill, together with the Currency Act and the Financial Institutions Act, is now being revised by the Council of State. Afterward, the ministry plans to forward the bill to the National Legislative Assembly.
He said the Currency Act also focused on expanding the scope of the central bank's official reserve management.
The draft bill says the central bank must deposit gains from reserve management in annual benefit accounts and withdraw from the same accounts to offset operational losses.
It maintains three separate accounts under the Note Issuing Department, which are used for banknote circulation and recording valuation changes.
The bill does not say the central bank must use any accounting standard with its reserve management. The central bank's losses of about 170 billion baht last year were derived from its own decision to market the reserve, he said.
