However, the BOT's increased independence will be controlled by accountability and transparency, as it is required to report policies and performance to the Cabinet and the Senate once or twice a year.

Under the draft law, the governor will be appointed by a selection committee and can be dislodged by the BOT's court of directors by a two-thirds vote if he or she is found guilty of wrongdoing, Chanchai Boonritchaisri, BOT senior director of the Legal and Litigation Department, said yesterday.

The draft proposes that senators appoint 10 members of a selection panel - called the "wise-men group" - who are former senior civil servants of the Finance Ministry, the Commerce Ministry, the National Economic and Social Development Board (NESDB), the Securities Exchange Commission and the central bank itself.

"Deputy Prime Minister MR Pridiyathorn Devakula, the former governor, believes that the wise-men group will be neutral because they will be mature former civil servants who are required

not to be involved in politics," said Chanchai.

The selection committee will not only appoint the governor but also the chairman of the court of directors, who is to be from the private sector. The governor will be prohibited from being chairman, in line with the good-governance practice currently adopted by commercial banks.

The wise-men group must also approve 10 directors proposed by the chairman and governor. Five from the private sector will have two three-year terms, while the other five will be the three deputy BOT governors, the permanent secretary of the Finance Ministry, and the secretary-general of the NESDB. They are required to oversee the governor's performance in accordance with good governance.

"Politics cannot intervene in the central bank directly, but there is no such thing as complete protection. The new structure will be able to screen political intervention to a certain level under the checks-and-balances system," Chanchai said.

The new law will not oblige the governor to resign if he or she underperforms, for example, in terms of keeping core inflation under control. However, the court of directors is authorised to remove the governor if the members uncover any mismanagement.

Moreover, the proposed court of directors would be more empowered than the central bank's current court, which covers only routine operations such as approving staff rotations or salary hikes.

Chanchai said the court's responsibility involved the macroeconomic picture, the exchange control law, the Credit Bureau Act, internal audits and other tasks beyond monetary policy, supervision and the payment system.

The Monetary Policy Committee, the Financial Institutions Policy Committee and the Payment System Committee will obtain legitimacy from the draft, as they have currently performed without legal support. Each panel is required to gather half of its directors from the private sector, and the BOT governor can be the chairman.

"The law opens up wide powers for the directors, but there is a prevention system. Any directors having a conflict of interest in any issue under consideration must so declare themselves and not attend the meeting," said Chanchai.

The draft will be soon sent to the Finance Ministry for approval before going through the final legal process.

Anoma Srisukkasem

The Nation