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.