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However, the Bank of Thailand (BOT) governor admitted it was possible for the US financial fiasco to have a domino effect.

All commercial banks have enough liquidity to conduct business and ameliorate any impact, and none has yet had to ask for financial aid from the central bank, Governor Tarisa Watanagase said.

But she does not believe the US financial woes will turn into a domino effect, because that country's Federal Reserve has injected a large amount of liquidity to rehabilitate financial institutions.

"I don't think Thai banks have a large exposure to other financial institutions except Lehman Brothers, which is a large institution," said the governor.

At present, Thai banks' exposure to Lehman Brothers, both on-balance sheet and off-balance sheet, is worth Bt6.4 billion to 6.7 billion.

That exposure is small, and accounted for only 0.09 per cent of Bt7 trillion worth of loans, she said.

The governor said excess liquidity remained in the banking system, as evidenced by oversubscribed bond auctions, even though foreign investors had pulled money out of the country.

The Kingdom has apparently recorded a smaller outflow than neighbouring countries. Foreign direct investment continues to flow into the country, she said.

However, some banks may have to monitor deposits after some depositors moved money into the stock market and mutual funds in a bid to avoid negative real interest rates.

Tarisa insists the BOT has closely monitored the situation and stands ready to inject liquidity into the system if need be.

"Liquidity is not a problem. The banking system has abundant liquidity, although different banks have different deposit structures. We monitor liquidity on an individual basis," she said.

The BOT said the banks held excess reserves of Bt1.06 trillion: Bt60 billion in cash and Bt1 trillion in bonds.

The governor said lending of Bt10 billion from Lehman Brothers (Thailand) could be bought by other commercial banks on a business basis if it involved good assets. Potential buyers would continue the lending, so that customers could proceed with their business.

The BOT emphasised the strong performance of AIG Retail Bank, which has a capital-adequacy ratio of 24 per cent.