InfoQuest (November 25, 2019) -- Speaking of the strategies and roadmaps of the central bank, Mr. Wiratai Santiprapop, governor of the Bank of Thailand (BOT), said the bank will face significant challenges in the next three years from now, which are defined as a period during which central banking is in a transformative world. The main task of the central bank in this period is to create a stable, sustainable and comprehensive financial environment.
Specifically, the challenges facing the BOT in the next three years mainly include the following seven aspects.
First, the financial system will move faster to usher in the era of digital finance. Thailand's financial system is considered one of the most innovative and digitally advanced system among emerging economies. Digital finance will help improve people's quality of life and enhance the potential of the business sector. In short, the central financial infrastructure must be interconnected, stable, secure and meet international standards. In addition, the development of central bank digital currency must keep pace with that of the digital financial era.
Second, the regulatory framework and mechanism for maintaining the stability of the financial system must be adjusted timely to cope with new risks and accommodate to new environments. Regulatory rules must support and promote the financial sector to keep pace with that of the digital financial era, ensure fair competition and reduce rule loopholes. At the same time, financial service providers must boast a strong risk culture. In order to ensure that risks outside the commercial banking system and new risks in the digital financial era will not affect the stability of the financial system and payment system, regulatory agencies must establish a comprehensive coordination mechanism throughout various regulatory processes to address the financial stability risks.
Third, monetary and fiscal policies will be limited due to structural factors. It is thus necessary to help the public gain a clearer understanding of the policies implemented by the central bank and make timely self-adjustment according to policy signals. The combination of monetary policy framework and policy tools must be able to achieve macroeconomic goals and ensure the stability of the financial system as well.
Fourth, exchange rate will undergo more violent fluctuations. Therefore, the private sector must be able to respond to foreign exchange risks more efficiently. Foreign exchange supervision and capital flow monitoring framework must be able to catch up with that of the digital financial era to ensure a more balanced inflow and outflow of foreign currencies. Meanwhile, the international reserve management framework must adapt to the digital financial era and the ever-changing global financial structure.
Fifth, cyber threats and technical risks will also become major risks to the financial system. To ensure that they will not lead to systemic risks, it is necessary to ensure the stability of the key infrastructure of the financial sector so that it can keep providing services and successfully address the risks of technological and cyber threats in non-financial fields. At the same time, financial service providers must manage their own data and the risks of cyber threats according to leading international standards. Whilst the financial sector must have sufficient talent reserve in face of such threats.
Sixth, attention will be paid to the sustainability in environment, society and good governance. Thailand's central bank and financial institutions must work together to help decrease social problems at home and solve the household debt issue to mitigate the vulnerability of the household finance to further ensure that no long-term risks will emerge, as well as ensure that people can access financial services, enjoy fair services and help reduce the financial burden of the people.
Seventh, there will be more challenges in maintaining the independence and reliability of the central back. Therefore, it requires efforts to make people and enterprises understand and convince them the role and ground of the central bank in implementing policies, to allow relevant parties to properly harness the information provided by the central bank. The ultimate aim is to build the central bank of Thailand into a well- recognized agency which is capable of implementing good governance, widely accepts opinions and provides easy access to the public.
To lay an important foundation for Thailand's central bank, efforts should be stepped up to release and enhance the potential of staff to become an important force of the bank, and the organization culture and working process should also be adjusted to make it more flexible. In addition, technology and data should be adopted as the main tools in all work processes.
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