BOT should improve its role : experts

Veerathai Santiproabhob, Siam Commercial Bank (SCB)'s executive vice president, said the BOT has a big challenge to build up its role to be in line with changes of "market power", linkage and speed, which involved in not only financial and foreign-exchange markets but also every markets such as goods, labour and capital.

The central bank should ameliorate its role of market guide in a bid to increase efficiency of monetary policy, he said in a seminar about BOT's role hosted by Thammasat University.

Veerathai recommended the central bank to send gradual signal and create proper market expectation, which would help the market to react on the signal correctly. He cited that investors in bond market had unwind their positions anxiously after interpreting the BOT's over-expected statement that the policy interest rate was halted.

The bank's EVP said to let the gradual signal work professionally, the BOT should understand deeply market linkage among financial, goods markets and real sector as a micro foundation for macro-economy. 

Moreover, Veerathai suggested that the BOT's supervision should be run based more on business judgement to serve with financial liberalisation.

"The BOT should adopt consultative communication with the market or make two-way communications. Earlier, it has issued any regulatory and then just informed the banks about the rules," said Veerathai.

Chodechai Suwanaporn, director of the Finance Ministry's Fiscal Policy Office, proposed the central bank to widen opportunity for the government and relating agencies to give any recommendation for its monetary policy. The government, he cited, has been also concerned on overall economy and taken responsibility to all people.

"The BOT should invite experts from private sector to give advice for the monetary policy, like foreign countries such as Germany and Japan," he said.

Monetary Policy Committee (MPC) should expand its responsibility to cover foreign-exchange policy. The new Monetary and Exchange Policy Committee (MEPC) would allow the monetary and foreign-exchange policies work relevantly unlike those last year when the central bank did not slash the policy rate before introducing the withholding reserve of 30 per cent.

Atchana Waiquamdee, the BOT's deputy governor, argued that the BOT's international reserves management framework was currently approved by MPC. The BOT's foreign reserve was operated with good risk management. For example, the reserve selling would not exceed earlier buying.

She insisted in the BOT's honesty and transparency on its operation although the earlier judgment would not be good.

Wichit Chaitrong

Anoma Srisukkasem