“I don’t think we should be overly concerned about my working relations with the new chairman,” he told reporters. “The central bank has its own structure and working system. Anything that we do is under public scrutiny anyway. Personally, I don’t feel any pressure at all.”
If this protagonist doesn’t feel any pressure, why should outsiders be concerned about a confrontation between the new chairman and the governor?
My own take is that these two gentlemen will gradually learn to adapt to each other’s style, both intellectually and emotionally. They are both highly qualified and experienced. They know that they are being closely watched for any possible conflict. And they will desperately try to avoid clashes that could undermine their respective credibility and public standing.
In other words, contrary to all speculation to the contrary, I am confident that they will get along famously, for no other reason than the fact that they each have to show the board of directors that they are professionals in their own field and that they aren’t at the beck and call of politicians or any vested interest groups.
The points of disagreement between Dr Virabongsa and Dr Prasarn in the past weren’t really substantial enough to “break the camel’s back”, so to speak. And Finance Minister Kittirat Na Ranong has more or less deployed his diplomatic finesse to smooth things over between the two.
“Some people have expressed concern that Dr Virabongsa might dig into the country’s reserves at the central bank to spend it on infrastructure construction,” he said. “Don’t forget that Dr Virabongsa is one of the devout followers of Luang Ta Mahabua [the late senior monk who mobilised donations of gold to put up as part of the reserves]. So, I am confident nothing of that sort would happen. Let me give you the assurance that the government has no policy to use the central bank’s reserves to set up a sovereign wealth fund, as has been reported earlier.”
Of course, Virabongsa had, in his capacity as an economist, proposed that the abundant reserves be spent on “more economically productive purposes”. And Prasarn, as the central bank chief, subsequently warned against such a move. But their public exchange of divergent views shouldn’t be taken as something cast in stone.
And once both of them work on the same board of directors, sharing responsibility and the same degree of accountability to the public, only professional judgement will be their guiding principle.
Besides, the central bank’s major decisions aren’t made by just the chairman and the governor. They are the joint responsibility of the whole board and committees tasked with roles to deliberate and rule on relevant policy issues.
Dr Virabongsa, more importantly, will have to deflate suggestions from certain quarters that he has been assigned to the central bank’s chairmanship to serve the ruling Pheu Thai Party. That’s why he will bend over backwards to demonstrate his own independence of mind. The fact that he has only about 18 months before the mandatory retirement age of 70 will also be a factor that will limit any attempt by him to “rock the boat” there.
Dr Prasarn, on the other hand, will have to prove beyond any reasonable doubt that he isn’t running the central bank as a “state within a state” – as is often charged by critics. That means the governor will show by his actions that he is a team player and that the central bank operates as a professional institution where all shades of opinion over major monetary policies are taken into full consideration without fear, bias or favour.
Politicians trying to put a wedge between the two will find the task highly complex. The two are amply capable of starting a running battle. But I know they won’t. The risk to their personal reputations is simply too high.
Besides, they aren’t that stupid.