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[Thai Economics Library | Archives| Currency Crisis 2007| Entrepreneurs]
July 08, 2010

The challenges that lay ahead for Thailand's new central bank head

By Jon Fernquest

BOT GovernorThailand has a new central bank governor this week.

Prasarn Trairatvorakul, the new Bank of Thailand governor-designate, has served as president of Kasikorn Bank and director of the Thai Bankers’ Association since 2004 (Read announcement article).

Today's article begins after the vocabulary.

central bank - the government's bank that controls all the other banks in a country, sets monetary policy, maintains the stability of the national currency and money supply, sets interest rates and inflation targets, saves failing banks as a lender of last resort during times of financial crisis (See Wikipedia)

Bank of Thailand (BOT) - Thailand's central bank (Read description at Mahidol University)

governor - the person in charge of a large government institution or organization such as a bank or a prison
challenges - difficult goals that must be achieved and overcome in the future (in order to complete the project and achieve success)
designate - chosen for a particular purpose or position in the future กำหนด, ที่ได้แต่งตั้ง
governor-designate - chosen to be governor for a term starting in the future
term -
the period of time that a person serves in an official government position
Kasikorn Bank - the fourth largest commercial bank in Thailand (See Wikipedia)
commercial banks -  a bank with many branch offices providing both people and businesses with services such as bankingaccounts and loans (See Wikipedia)
Thai Bankers’ Association (TBA) - a industry trade association for domestic banks in Thailand (Read history and see website)
domestic - within the country

Politics

Prasarn issued with priority list

PM, Korn seek upgrade in financial products
8/07/2010
Somruedi Banchongduang

The incoming central bank governor has been set the target by the government of ensuring fair prices for and boosting the quality of financial services available to the public.

Prasarn Trairatvorakul said Prime Minister Abhisit Vejjajiva and Finance Minister Korn Chatikavanij wanted to see an improvement in the products made available to the public by financial institutions, both in terms of quality and pricing.

issued - made available ออกใหม่
priority - something important that must be done first or needs more attention than anything else การให้ลำดับความสำคัญ,  สิ่งที่ได้รับความสนใจมากกว่า
priority list - a list of important things that must be done (items in list sorted into order of importance)
upgrade - improve; make new, modern, and up-to-date
target - a goal
set a target - create a goal to be achieved
boosting - increasing เพิ่ม
financial services - all sorts of services involving money including banking, insurance and securities such as stocks, futures and derivatives (See Wikipedia)
improvement - when something gets better or when you make it better การปรับปรุง, การทำให้ดีขึ้น
institutions - large and important organizations, such as universities or banks สถาบัน
financial institutions - banks and other organizations that deal with money such as investment companies and funds as well as insurance companies (See Wikipedia)
X in terms of Y - using Y to describe X

Mr Prasarn, currently the president of Kasikornbank, will succeed Tarisa Watanagase as the 22nd governor of the Bank of Thailand on Oct 1 after he received the approval of the cabinet on Tuesday.

Mr Prasarn yesterday played down concerns over financial institutions engaging in unfair practices.

approval - official permission การอนุมัต
concerns - worries ความกังวล
played down concerns - told people not to worry
engaging - creates and maintains interest in the reader
practices - common ways of doing things, ways of doing commonly repeated tasks
engaging in unfair practices - have business procedures that treat people unequally

''The interest spread [the margin between loan and deposit rates] in the Thai banking sector is considered moderate based on economic and financial system development,'' he said on the sidelines of a seminar held by Krungthep Turakij newspaper and the Thai Health Promotion Foundation.

The average margin, officially called the net interest margin (NIM), of the banking industry in Thailand was 3.2% to 3.3% last year, which was higher than in the financial markets of developed countries but lower than that of developing countries.

interest - payments made for the use of another's money for a period of time
spread - difference  
interest spread - difference between two interest rates
margin - profit margin
profit margin - a company's profits as shown by profit as a percentage of revenue
loan - an amount of money that a person, business or country borrows เงินกู้
deposit - money kept in a bank
sector - a part of a country's economy or business activity ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
moderate - neither very great nor very small in strength, size, amount or degree ระดับปานกลาง
development - the gradual growth and formation of something
net interest margin (NIM) - "measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets...expressed as a percentage of what the financial institution earns on loans in a time period and other assets minus the interest paid on borrowed funds divided by the average amount of the assets on which it earned income in that time period (the average earning assets)" (See Wikipedia)

Generally, the interest margin for large businesses is considerably lower than for smaller businesses because large businesses have clear credit information which reduces the risk of financial institutions and alternative means to mobilise funds such as the issue of bonds.

As a result, the improvement of credit information of small businesses will be a vital policy for the government to undertake to help lessen the spread in the long run, he said.

clear - easy to understand
credit - money that you owe someone (a bill that grows until you pay it off at the end of the month, for example)
credit information - information on whether a person or company pays back loans on time and also pays bills on time
risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
alternative - another choice ตัวเลือก / ทางเลือก
means - methods; ways วิธี, วิธีการ
mobilise - (of soldiers, police or other groups of people) to prepare to do something such as fight a war เตรียมกำลังพร้อมรบ
funds - money needed or available to spend on something เงินทุน
issue - offering securities (stock shares, bonds) for sale
bonds - when a company or government borrows money from many different people by issuing large numbers of "bonds" which are agreements "to pay back the money an investor has lent plus a fixed amount of interest on a particular date" (See Wikipedia)
vital - extremely important; necessary for the success or continued existence of something จำเป็นสำหรับชีวิต; สำคัญมาก
policy - a set of plans or action agreed on by a government, political party, business, or other group นโยบาย (See Wikipedia)
undertake - to do รับภาระ
lessen - to reduce; to make something become smaller, weaker, less important, etc. ทำให้น้อยลง
in the long run - over a very long period of time

Mr Prasarn said he had no fears about political interference in the central bank given its structure and operating system.

Ms Tarisa said the current margin of the Thai banking system is 2.78%, which is considered not too high compared with the rate of 2.8% to 2.9% in neighbouring countries.

However, the Bank of Thailand has a plan to lower the margin based on a master plan for the country's financial system from this year to 2014.

interference - the process of deliberately becoming involved in a situation and trying to influence the way that it develops การเข้าแทรกแซง
current - of the present time ปัจจุบัน
master plan - the plan that gives the over goals for a large project over a long period of time  

She said if the bad debts in the banking system incurred from the 1997 financial crisis fall significantly, twell he operating costs of the banks will also come down.

More competition in the system will also eventually bring down service fees in the banking system.

The master plan calls for the Bank of Thailand to allow two more foreign bank branches in the country and an upgrade of some foreign bank branches to be fully-fledged commercial banks.

crisis - an urgent, difficult or dangerous situation วิกฤต
significantly - in an important way อย่างสำคัญ
eventually - at the end of a period of time or at the end of a process ในที่สุด
fees - money that you pay to be allowed to do something ค่าธรรมเนียม
upgrade - make changes to improve
fully-fledged Y - is a complete version of Y (not just under development)
commercial banks -  a bank with many branch offices providing both people and businesses with services such as bankingaccounts and loans (See Wikipedia)

Mr Prasarn said he remains positive about the country's economy for this year and expects growth of 4% to 6% based on a projection from the Kasikorn Research Center.

Momentum gains from promising gross domestic product growth in the first half of the year will further support the Thai economy.

positive - hopeful and confident, or giving cause for hope and confidence ซึ่งมองในแง่ดี
projection - a calculation or guess about the future based on information that you have การคาดคะเน
momentum - development or progress in a project that is becoming stronger and stronger, faster and faster (so it can't be stopped, will complete successfully)
promising - likely to be successful มีแนวโน้มที่ดี
GDP, Gross Domestic Product - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories  + (Government Spending - Taxes)  + (Exports - Imports) (See Economist Glossary)
domestic - inside the country ภายในประเทศ
support - help
Kasikorn Research Centre - the well-known research organisation of the Thai Kasikorn Bank that provides expert economic and financial advise in reports (Available at Thailand Information Center, 6th floor of Chulalongkorn Library)

Global economic uncertainty mainly in the US and the Europe will be another key risk factor for the economy, he said.

''Thai economic growth next year would be lower than this year due to base effect, and it would be concerned rather than this year as a result of higher external risk," the upcoming central bank governor said.

global economic uncertainty - situation when people don't know what is going to happen next in the world economy
key - important คนสำคัญ
factor - a fact or situation which influences the result of something ปัจจัย
key risk factor - the most important dangerous thing that people must watch for in the future
base effect - this year's growth will probably be high because economy is recovering from a deep recession, growth went down to a very low level (base level)
concerned - worried about something มีความกังวล
external risk - dangers outside the country
upcoming - will happen soon ที่กำลังจะมาถึง

With improving economy, the central bank is possible to lift its policy rate to 2% by the end of this year starting from August from the current level at 1.25%. However, it would be gradually increased in line with economic environments both globally and locally.

The Bank of Thailand has managed the country's foreign exchange position on a firm basis for the past five years.

The baht has moved with less volatility than the currency of several regional countries.

But it has appreciated against the dollar and the euro because of specific economic problems in the US and Europe leading to a weakeing of their currencies, Mr Prasarn said.

policy rate - the official interest rate that the central bank sets in order to control other interest rates (that are usually tied to and calculted from the policy rate)
lift its policy rate - increase its policy rate
in line with - following or agreeing with
globally - throughout the world ทั่วโลก
financial position - all the assets owned and all the debts that must be paid at a point in time by a person or company, the balance sheet
foreign exchange position - all the foreign currerncies owned and also contracts for delivery at future dates (futures)
firm - strong,  hard, firm, not soft
on a firm basis - did strongly (with a good policy, not making any mistakes)
volatility - a measure of risk in financial markets, the degree to which asset prices swing up and down (See The Economist and glossary) อัตราความเสี่ยงต่อการลงทุนทางการเงิน
currency - a widely used the money accepted for exchange of goods in an economy เงินตรา (See Wikipedia)
appreciated against the dollar - increased in value compared to the value (if currency is more expensive, then exports from the country become more expensive)

(Source: Bangkok Post, Prasarn issued with priority list, PM, Korn seek upgrade in financial products, 8/07/2010, Somruedi Banchongduang, link)


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