The Bank of Thailand (BoT) chief has said that the independence of central banks is increasingly being questioned, facing greater scrutiny now than at any point in the last decade, according to a speech transcript released on Monday.
“Central bank independence in many countries, including Thailand, is being challenged despite having performed reasonably well over the past decades,” remarked Governor Sethaput Suthiwartnarueput during the BIS annual conference in Switzerland, from which the Bank of Thailand released an undated transcript on Monday.
“If we allow central bank independence to be eroded, we will not be able to deliver on our core mandates,” the governor stated.
According to the BIS website, the conference occurred on June 28; it published a paper that included transcripts of speeches by various central bank governors, including Mr. Sethaput, on Wednesday.
Later that day, the BoT removed the transcript from its website and did not immediately respond to a request for comment.
These remarks came during a period when the BoT was at odds with the government over monetary policy, having faced nearly daily calls to reduce interest rates to stimulate growth until the previous month.
In a surprising move in October, the BoT lowered its benchmark rate to 2.25%, emphasizing that this was a “recalibration” rather than a surrender to political demands and stating it did not signify the start of an easing cycle.
Last week, former governors of the BoT voiced concerns that a candidate for the central bank board chairmanship, known for “close political ties,” was likely referring to the government’s nominee, a critic of the current governor.
Although the government insists on respecting the BoT’s independence, it has urged the central bank to take more active measures to revive the sluggish economy.
The BoT announced on Monday that the selection of a candidate had been postponed to the following week, marking the second delay.
Finance Minister Pichai Chunhavajira noted that the position held limited power and that the postponement would not affect the central bank’s operations.
In his conference speech in Switzerland, Mr. Sethaput also mentioned that unconventional policies like balance sheet expansions and extensive crisis interventions have broadened central banks’ roles in private markets and heightened expectations of their capabilities.
“It results in not just moving the goalposts but also adding more goalposts. As expectations increase, it becomes harder to ring-fence our reputation, credibility, and the case for central bank independence,” he said.
