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Tuesday, March 19, 2024

Thai banks will not be affected by the crisis in the US and Europe

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Thailand expects limited impact on its banks and financial system as a result of the banking crisis engulfing US and European banks

Thai Finance Minister Arhom Termpittaipaisith has assured that Thai banks and financial institutions will not be affected by the banking crisis in the United States and Europe as local institutions have little to do with such banks, reports the Matichon.

The Finance Minister discussed the issue with the Bank of Thailand and revealed that the volume of transactions of local organizations with these banks is only 2 million baht. Thailand introduced stricter oversight of local institutions after the 1997 Asian financial crisis, strengthening the system for financial institutions, Arhom said.

The Bank of Thailand said it expects limited impact on the country’s financial system as a result of the problems plaguing banks in the US and Europe. The central bank continues to monitor the situation.

According to the central bank, Thailand’s banking system had a capital adequacy ratio of 19.4 percent at the end of 2022, above the minimum requirement of 8.5 percent. The liquidity coverage ratio was 197% and the NPL coverage ratio was 172%. The NPL ratio is low at 2.73%, the regulator said.

Talking to the public is the key to preventing panic and the central bank continues to ensure this process, Arhom said, adding that the local stock exchange was affected by the panic but limited to the short term.

One factor affecting the Thai economy is the global economic slowdown, which is limiting exports, Arhom explained. The sector needs to look for new markets, especially in ASEAN.

Read on: US bank bankruptcy will not affect Thailand

The finance minister said the authorities should keep an eye on the movement of the baht as the US Federal Reserve is set to consider a rate hike this week. The Thai baht is holding steady at 33-34 per US dollar, higher than at the end of last year.

The government can still use stimulus packages to stimulate economic growth, Arkham reminded.

According to the minister, the economy could grow by 3-4% in 2023. A higher rate would require more investment, especially from the state. Last year, private investment grew by 6% over the previous year, Arhom added.

The country’s leadership’s efforts should focus on balancing fiscal and monetary policies, promoting new business models, investing in high-growth enterprises and clean energy, Archom said.

The country also needs to reshape its revenue structure by seeking new sources of revenue. Spending on human resource development and education needs to be increased by shifting away from public infrastructure, the minister added.

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