Central bank battle

There are rumours that one of Virabongsa's aims is to remove Tarisa from the governorship. This plan, if successful, will undo the legacy of the central bank since it recovered its reputation after the 1997 economic crisis. Virabongsa would like to do away with inflation targeting, which is the central bank's policy anchor, as he has become a pro-growth economist.

His strong stance against Tarisa is evident. He has attacked her in public and accused her of mismanaging monetary policy. While the BOT wants to raise the policy interest rate to keep inflation under control, Virabongsa wants to slash the rate, concerned about economic slowdown and a lack of liquidity. Also, he is reportedly not satisfied with Tarisa who, in his view, is intractable and uncontrollable.

In an earlier interview with Suthichai Yoon, Virasbongsa said he would not accept the government's offer of becoming finance minister because he was not authorised to sack the current governor. "I will not be the finance minister if the current governor is still in her post," he said.

The former deputy PM and finance minister did not reverse his stance. He took the post of chief economic adviser with firm backing from the pro-growth group.

An industry source said there is a possibility that Apichai Boontherawara, president of the Export and Import Bank of Thailand, could succeed Tarisa if she is sacked. The process of removing her might take place over the next 12 months.

Apichai belongs to the same school of thought as Virabongsa, who advocates an expansionary monetary policy to boost the sluggish economy.

Tarisa is a tough lady trying to hold her ground. The country's first female governor is afraid that political intervention on monetary policy without sound academic grounds could harm the country's policy management.

The new Monetary Policy Committee is likely to be dominated by four of seven outside members, appointed by the BOT board. They would have nearly full influence on the committee if a new governor is appointed and sides with the government.

Virabongsa and his team, however, cannot remove Tarisa easily. The new BOT Act obliges the finance minister, if he wants to sack the governor, to have clear evidence to prove fraud or incompetence.

But it will not be easy for Virabongsa to find grounds for sacking Tarisa, as evidenced by several recent attempts, including the case of BankThai's recapitalisation.

The pro-growth economist cannot cite her mismanagement of monetary policy because he cannot prove how monetary policy has hurt the economy. In fact, the BOT has just raised its interest rate for the first time in two years. Other facts, particularly the prolonged political turmoil, should be factored in as more critical problems hurting confidence and economic growth.

 In the meantime, Tarisa is being marked and will be ready to face the first hit.