Central Bank monitoring Greek crisis for local effects
Central Bank officials said they carefully assessing the situation in Greece and would take whatever steps necessary to protect Thailand’s financial systems from any fallout from the Greek debt crisis, as international money markets displayed greater volatility as Greece and the European Union battled over how best to resolve their problems.
“The global money markets will continue to fluctuate … because of the uncertainty over Greece’s debt problem, which has affected the euro. The central bank will closely monitor the situation, and we are ready to maintain the stability of Thailand’s financial system,” said Chantavarn Sucharitakul, the Thai central bank’s assistant governor for the Financial Markets Operations Group.
Following the Asian financial crisis of 1997, the central bank and the government instituted a range of reforms over several years. The result has been greater resiliency in both economic and financial terms. Consequently, when the 2008 financial meltdown erupted in the United States and Europe, Thailand was one of the countries least affected, as measures had already been taken to reduce the vulnerability of the financial system.
Among the steps taken by the government after 1997 was opening up of banking and financial system to foreign players. Several bought stakes in Thai financial institutions, bringing in more modern management and business approaches. In addition, the government updated old laws and drafted new ones. “Regulatory controls have improved substantially,” wrote the Economist on the tenth anniversary of the 1997 crash. Most non-performing loans have been cleared, and the Bank of Thailand’s foreign reserves are at an all-time high.
Shippers, meanwhile, warned that if the Greek crisis were not resolved in a positive manner, Thailand’s exports to Europe might suffer. Thai National Shippers’ Council Chairman Nopporn Thepsithar said that only if Greece defaulted would it affect Thailand, as the European economy would be in greater turmoil. “But I do not see this happening, as I believe that the E.U. should be able to handle it,” he said.
The Greek situation is just one factor, however, that could slow growth in Thailand. Don Nakornthab, director of macroeconomic policy at the central bank, said that the MERS situation, China’s slowing economy and Thailand’s aviation difficulties were also potential drags on economic expansion this year. The Bank of Thailand now expects that the Thai economy will grow by 3 percent in 2015.
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