The story behind the BOT governor’s near untouchability

The cold war between Pheu Thai Party and Sethaput Suthiwartnarueput, the current governor of the Bank of Thailand (BOT), reached a boiling point when Paetongtarn Shinawatra shook the independence of the central bank, triggering a fierce backlash against Pheu Thai.

Paetongtarn, Pheu Thai Party leader, said in the statement "10 Months of No Waiting, Pushing for Full 10" that the independence of the BOT is an obstacle to addressing economic issues. She said the BOT's monetary policy is "unwilling to understand and cooperate" and would obstruct efforts to reduce the country's high debt ceiling.

On Monday, Prime Minister Srettha Thavisin attempted to ease tensions by giving interviews to the media in Roi Et province, addressing two issues: that he had no plans to remove the governor of the central bank, and there are no plans to amend the Bank of Thailand Act of 2008.

The heated debate between the Pheu Thai Party and the central bank during the extended holiday period was sparked by statements made onstage by Paetongtarn, the daughter of Thaksin Shinawatra, that "The law tries to make the BOT independent from the government, which is an obstacle in solving economic problems."
This statement was interpreted as implying that Pheu Thai intends to amend the Bank of Thailand Act of 2008 to reduce its independence, allowing political interference.

Indeed, the Pheu Thai Party and the BOT have had a long-standing conflict. During the Yingluck Shinawatra administration (2011-2014), with Kittiratt Na-Ranong as deputy prime minister and finance minister, there were conflicts over interest-rate policies. The situation escalated to the point where there were considerations to remove Prasarn Trairatvorakul, the governor of the BOT at that time, from his position. However, ultimately, they did not dare to dismiss him from his position.

As we all know, the governor of the central bank has excellent protection under the Bank of Thailand Act of 2008, which was significantly amended at that time. In particular, the process of removing the governor became more challenging compared with the past.

After the coup d'état in 2006, during the Surayud Chulanont administration, in August 2008, the conservative faction proposed to amend the Bank of Thailand Act.

Under the old law, the minister of finance had the authority to propose the removal of the governor of the central bank without specifying reasons or charges. This led to amendments to the law.

In the Bank of Thailand Act of 2008, Section 28/19 (4) grants the minister of finance the power to propose the dismissal of the governor to the Cabinet. However, there must be valid reasons for the dismissal, such as severe misconduct or malfeasance.

Section 28/19 (5), also grants the BOT's board the authority to propose to the minister of finance for the dismissal of the governor of the BOT if there is severe misconduct in performing duties or lack of ability.
In summary, according to the new law, the political faction will hardly be able to dismiss the governor of the central bank in cases of policy conflicts, such as those between the government of Srettha Thavisin and Sethaput, the current governor.

Over the past 70 years, there have been intense conflicts between the central bank and the Ministry of Finance, leading to the dismissal of four governors out of a total of 20.

The dismissals of the four governors occurred under the old version of the Bank of Thailand Act.
Choti Kunakasem, the sixth governor, was dismissed by Field Marshal Sarit Thanarat, the prime minister, on charges related to the procurement of foreign companies to print banknotes in 1959.

Nukul Prachuabmoh, the 10th governor, was dismissed by Sommai Hoontrakul, the finance minister, due to policy conflicts, including disagreements over the credit tightening policy and the proposal to establish a deposit insurance institution in 1984.

Kamchorn Sathirakul, the 11th governor, was dismissed by Pramuan Saphawasu, the finance minister, due to issues related to conflicts over interest rates in 1990.

MR Chatumongol Sonakul, the 16th governor, was dismissed by Somkid Jatusripitak, the finance minister, due to policy disagreements regarding the value of the Thai baht in 2001.

Therefore, the dismissal of the central bank governor in the present era hardly ever can occur because the new law fully protects and safeguards the governor.