The Bank of Thailand (BOT) has assured that Thailand’s financial system is resilient but stability could be affected by an abrupt change in the global financial market, which warrants close monitoring.
The central bank said in a statement that potential impacts include deterioration in debt serviceability of households and smaller businesses if the global economy heads into recession and subsequently deters Thailand’s economic recovery.
Its statement detailed the outcome of a meeting on Tuesday (6 Dec) between the monetary policy and financial institutions policy committees.
The BOT added that higher volatility of risky assets and funding costs of the corporate sector arising from global uncertainty could affect financial institutions.
It also said, “The committees agree that regulatory authorities must collaborate closely to monitor situations and prepare measures to ensure continued functioning of the financial market in times of stress.”
However, the central bank noted that the Thai economy is expected to continue on a steady recovery path, and its gradual and measured monetary policy tightening has been consistent with the economic environment.
The BOT has raised its key interest rate by 75 basis points in three meetings since August to contain inflation. (NNT)