• 
• 

Published on September 15, 2007

Having clarified them in a meeting with 40 members of NLA yesterday, the central bank will launch campaigns to boost public understanding of the Bank of Thailand Bill (BOT Bill), Currency Bill, Financial Institutions Business Bill and Deposit Insurance Agency Bill.

Finance Minister Chalongphob Sussangkarn had withdrawn the Currency Bill before its NLA reading for fear of its being voted down by right-wing members. Now the bills are expected to be proposed to the NLA soon.

The Financial Institutions Business Bill will be considered first and the Currency Bill last, having come before the Cabinet on Tuesday.

Sangsit Piriyarangsan, chairman of the NLA's Finance, Banking, and Financial Institutions Committee, said members had offered some observations on the bills in the hope of improving them and that the Kingdom's entire economy, good governance and checks-and-balances system would benefit in the long run.

"We made some suggestions to the central bank to propose to the committee. The BOT should publicise details and pave the way for people to participate, which will guarantee the bills' transparency and credibility," he said.

BOT Governor Tarisa Watanagase expressed confidence that the bills would

be passed by the NLA.

Deputy Finance Minister Sommai Phasee said that if approved they would, along with the SEC Act and the Accrual Account Act, encourage the economy to grow smoothly.

The NLA asked the central bank to insert in the BOT Bill a principle about the relationship between the Finance Ministry and the BOT ensuring that the central bank could operate independently while the ministry and government could probe its operations in time to avert an economic crisis.

Sangsit said the two organisations needed clearer collaboration because they were in charge of the country's financial and economic system.

"The NLA calls for a clearer legal relationship between the two organisations leading to better economic performance without political intervention," Sommai said.

The NLA proposed that the Currency Bill should allow the BOT to use assets in the Special Reserve Account to back up circulating banknotes in an emergency when the Capital Account did not suffice.

"We think the pertinent Article 34/2 should be kept, but I don't know if any committee would put it back in," Sangsit said.

The minister and BOT cut the article out of the bill after complaints.

Tarisa said the BOT had no need to use the assets in the Special Reserve Account for at least 10 years so it had agreed to drop the article.

"The cut does not weaken the economy, and we doubt that the economic crisis will recur. The central bank should explain to the public that the

 

 

 lid is tightly on the special-reserve jar," Sommai said.

The NLA questioned the BOT's supervisory role as foreign countries had established special organisations to supervise and regulate financial institutions.

On the Deposit Insurance Bill, the NLA pointed out that large foundations and associations would not be able to shift their deposits properly to 43 financial institutions to comply with the guaranteed ceiling of Bt1 million per bank.

The BOT, however, said the bill allowed for a waiver for such organisations under a full guarantee.

Meanwhile Kasikornbank president Prasarn Trairatvorakul urged the BOT to tackle weak banks before of the Deposit Insurance Bill became law.

Although the country's banking system has been strengthened, some banks need more strength to build up depositors' confidence, he said, so that a withdrawal panic does not affect the industry as a whole.

Depositors should study the bill's details as a guide to investment, he said, while banks should inform people about the bill by disclosing more information.

Under the Deposit Insurance Agency Bill, banks would be allowed to create products giving higher returns for higher risks.

Anoma Srisukkasem

 Somruedi     Banchongduang

 The Nation