Thailand
Thailand[THB]
...
Institutional setup of monetary policy decisions and operations
| Policy decision body, size and composition | Monetary Policy Committee |
|---|---|
| Major mandates 1 | A flexible inflation targeting framework to keep the inflation rate at an appropriate level while promoting full-potential economic growth and a stable financial system |
| Decision-making process | Majority vote |
| Frequency / length of meetings | 6 times a year, 7-10 weeks apart |
| Frequency of announcements | Same |
| Main policy target | 1-day bilateral repurchase rate |
Overview of key features
| Key policy rate | 1-day repo |
|---|---|
| maturity (days) | 1 |
| Operating target | 1-day repo |
| maturity (days) | 1 |
| Standing facilities | Lending, deposit |
| Corridor width (bp) | 100 |
| Reserve requirements | Yes |
| maintenance period | 2 weeks |
| Main operation 2 | RS / CB bills and bonds / FX Swap |
| functions | Mainly liquidity absorption |
| maturity (days) | 1,7,14 days and 1 month / 3 months to 2 yrs/ up to 1 yr |
| regular interval | Yes |
| frequency | Daily / 1-2 times per week /Discretionary |
| Overall frequency | Daily |
| Discretion left to operational desk | Some discretion with respect to choice of instruments, size and timing of operations |
| Key policy signals via | |
| announcement | √ |
| keynote tender | √ (RS 1-day) |
| standing facility | |
| other |
Monetary policy communication
| Explicit use of forward guidance | No |
|---|---|
| Timing / media of policy announcement | 2.00 pm. on the day of MPC meeting; BOT website, Reuters and Bloomberg |
| Policy announcement and documents | 1-day bilateral RP rate |
| Explaining policy decisions | Press statements and Edited minutes of MPC meetings |
| Dissemination of minutes (timing / media) | Yes. Two weeks after MPC meeting |
| Content of minutes | Description of economic and financial conditions and policy considerations |
| Publication of forecasts 3 | Every other meeting |
| Publication of projected path of policy rate 4 | No |
Reserve requirements: ratios and size
| Main functions served | Liquidity management |
|---|---|
| Domestic currency | 1% of deposit base 5 |
| Foreign currency | |
| Average | .01 |
| Required reserves | THB 171.7bn 6 |
| Required reserve as % of GDP | .0093 7 |
| Actual reserves | THB 180.0bn 8 |
| Actual reserve as % of GDP | .01 9 |
Main features of reserve requirements
| Averaging | Y |
|---|---|
| Carry-over | Y |
| Type | Lagged |
| Maintenance period | 2 wks |
| end (day) | Tues |
| Calculation period | 2 wks |
| end (day) | Tues |
| Lag before maintenance | 2 wks |
| Vault cash | Y |
| restrictions | Y 10 |
| Remuneration | N 11 |
| average rate | |
| marginal rate | |
| Framework last changed | Jan 2016 |
Liquidity position and forecasting
| Structural Position | Surplus |
|---|---|
| Most volatile factor(s) | Public sector flows |
| Most unpredictable factor(s) | Public sector flows |
| Forecast horizon(s) | 1 month |
| Frequency | Daily |
| Frequency of revision | Daily |
| Forecast published? | No 12 |
Standing facilities: lending / market ceiling
| Name | End-of-day Lending Facility |
|---|---|
| Form | Repo |
| Pricing method | Policy rate plus 50bps |
| Maturity | O/N |
| Access limited by/to | Eligible collateral; banks, finance companies, specialised financial institutions and other juristic persons permitted by BOT |
| Function(s) | Limit interest rate volatility |
Standing facilities: deposit / market floor
| Name | End-of-day Deposit Facility |
|---|---|
| Form | Deposit |
| Pricing method | Policy rate minus 50bp |
| Maturity | O/N |
| Access limited by/to | Banks, finance companies, specialised financial institutions and other juristic persons permitted by BOT |
| Function(s) | Limit interest rate volatility |
Open market operations: repo or reverse repo
| Name/Type 13 | RS |
|---|---|
| Maturity | 1D, 7D, 14D and 1M |
| Frequency | Daily |
| Pricing method | 1D: Fixed rate >1D: Variable rate, indexed with the policy rate |
| Access limited by/to | Bilateral Repo Primary Dealers |
| Function(s) | Absorption of excess liquidity |
Open market operations: central bank bills
| Name | BOT Bills and Bonds |
|---|---|
| Total issuance | THB 2.6 trn (as of end-Jul 2022) |
| Maturity | 3 Months – 2 years |
| Restrictions on possible maturities | No 14 |
| Pricing method | Variable-rate tender |
| Access limited by/to | Financial institutions (banks, finance companies and credit fonciers) and institutional investors |
| Discretion left to operational desk | Size and auction schedules |
Open market operations: FX swaps
| Maturity | 1D-1YR |
|---|---|
| Frequency | Discretionary |
| Pricing method | Over the counter (OTC)/ Auction 15 |
| Access limited by/to | BOT's FX counterparties |
| Function(s) | Absorption of excess liquidity |
Other significant liquidity management means
| Name/Type 16 | OT (Outright purchase of public sector debt securities) |
|---|---|
| Form | Outright transaction |
| Frequency | 2-4 times per quarter (as needed) |
| Maturity | Up to 20 Yrs |
| Pricing Method | Variable-rate tender |
| Access limited by/to | BOT's outright counterparties |
| Function(s) | Liquidity management 17 |
Settlement systems and intra-day liquidity facilities
| Settlement system | RTGS, since 2001 (first version launched 1995) |
|---|---|
| Intra-day liquidity facility | ILF Repo |
| Charge | No charge 18 |
| Foreign currency settlement system | Link to Hong Kong’s USD CHATS system |
| CLS participation by banks | No |
| Other settlement system(s) | Imaged Cheque Clearing System |
Collateral
| Standing facilities: List of eligible collateral | 1. Government bills and bonds 2. Government-guaranteed state enterprise bonds or state enterprise bonds with AAA rating 3. Central bank bills and bonds 4. USD 5. Securities issued by governments and central banks of countries which BOT has signed CBCA (currently, JGS, MGS, securities issued by BNM) 6. Foreign currencies of countries which BOT has signed CBCA (currently, JPY and MYR) |
|---|---|
| Standing facilities: Discretion of central bank on collateral 19 | Yes. The collateral types can be expaned upon the BOT Board approval |
| Open market operations: List of eligible collateral | 1. Government bills and bonds 2. Government-guaranteed state enterprise bonds or state enterprise bonds with AAA rating 3. Central bank bills and bonds |
| Open market operations: Discretion of central bank on collateral 20 | Yes. The collateral types can be expaned upon the BOT Board approval |
Dissemination of operational information: liquidity forecast
| Forecast published? | No |
|---|---|
| Channel(s) | |
| Timing | |
| Remarks |
Dissemination of operational information: open market operations
| Volume and price published? | Volume and price for BOT bills and bonds issuance and Bilateral repo Volume only for Outright sales/purchase of gov. securities |
|---|---|
| Channel(s) | BOT website, Reuters, Bloomberg |
| Timing | Daily, upon completion of each operation |
Dissemination of operational information: standing facilities
| Lending facility usage: Channel(s) | Not published |
|---|---|
| Lending facility usage: Timing | |
| Deposit facility usage: Channel(s) | BOT website |
| Deposit facility usage: Timing | Daily, upon completion of operation |
Other information dissemination
| Type | Financial institutions’ current account balances at the BOT and its average (to date) in the current maintenance period |
|---|---|
| Channel(s) | BOT website |
| Timing | Next day (10.00 am) |
1 Describe as well the legal status of the mandate and involvement of government
2 RP = reversed purchase (repo, inject liquidity), RS=RRP=reversed sale (reverse repo, absorb liquidity), RT=reversed transaction (repo or reverse repo).
3 For instance, economic and inflation forecasts related to policy decision.
4 If applicable, describe the publication of any fan-charts or uncertainty bands around the forecasts/projections.
5 The reserve requirement base includes all types of deposits, borrowing through issuance of bills of exchange and promissory notes, short-term foreign borrowings maturing within one year, and other borrowings with index-linked returns or embedded finanical derivatives
6 Required and Actual Reserves is the average reserves in July 2022
7 Reserves in a percentage of 2019 GDP
8 Required and Actual Reserves is the average reserves in July 2022
9 Reserves in a percentage of 2019 GDP
10 Up to 0.2% of the 1% requirement.
11 No remuneration on the reserve balances held at Bank of Thailand.
12 The Bank of Thailand publishes daily the system current reserve balances held at the BOT and the average reserve balances (to date) in current maintenance period.
13 RP=Reversed purchase (“repo”), RS=RRP=Reversed Sales (“reverse repo”), RT=Reversed transaction (RP or RRP).
14 There is no legal restriction on possible maturities, but the Bank of Thailand and the Ministry of Finance closely coordinate bond issuance plans in order to maintain appropriate level of sovereign bills and bonds at different tenors across the curve.
15 Swap auction is planned to implement in Q4-22
16 OT = Outright Transaction, DB = Direct Borrowing, DL = Direct Lending.
17 Public sector debt securities are purchased mainly to be used as collaterals in the reverse repo (Bilateral Repo) transactions.
18 In the event that the intra-day liquidity is not repaid by the end-of-day, banks will be charged the same interest rate as that of Lending Facility.
19 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
20 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.