Published on January 18, 2006

The Bank of Thailand expects Thais to spend Bt124 billion during the Chinese New Year, which will be 63 per cent of the Bt196-billion banknote reserve set aside for the festival.

Swangchit Chaiyawat, deputy governor of the central bank, said yesterday consumers were likely to spend less cash than the central bank has in reserve, and would spend less than last year.

Consumers spent Bt160 billion last Chinese New Year, compared to the BOT’s banknote reserve of Bt252 billion.

Swangchit said lower cash spending could, however, be due to more consumers paying for goods and services by credit card and other electronic and not a reflection of overall reduced spending.

“People who travel are using credit cards and not spending less. We believe people use less cash,” the deputy governor said.

However, spending during the Chinese New Year in 2005 was only Bt100 billion, while the BOT’s banknote reserve was Bt369 billion. The general election was also held during this time.

During the Chinese New Year in 2004, the central bank’s banknote reserve was Bt345 billion but only Bt114 billion was spent.

The central bank generally reserves banknotes for commercial banks to distribute to consumers during festivals in addition to banks’ own note reserves.

Of the BOT’s banknote reserves of Bt196 billion for this Chinese New Year, there are 320 million Bt100 notes, 220 million Bt20 notes, 110 million Bt1,000 notes, 80 million Bt500 notes, and 30 million Bt50 notes.

This year, the BOT plans to issue up to 2.3 billion banknotes. However, the central bank will issue fewer Bt500 notes as consumers prefer to use Bt100 and Bt1,000 notes instead, Swangchit said.

She added that the BOT would also issue 10 million Bt60 banknotes on June 9 to commemorate the 60th anniversary of His Majesty the King’s accession to the throne.

There are about 3 billion banknotes currently in circulation representing Bt770 billion, an amount fully backed by international reserves. The law stipulates that at least 60 per cent of banknotes circulating in the system must be backed by international reserves.

The central bank will also support commercial banks, which have set up a central company to manage the handling and circulation of banknotes among them in order to reduce operating costs.

Anoma Srisukkasem

The Nation

Post your comment to this story here