BOT boss weathers the storm
Maintaining an emotional equilibrium and a conscience has been the mantra of Prasarn Trairatvorakul, the governor of the Bank of Thailand, in helping smooth the way in the five years he has held the job.
In an interview with Nation Group, the Harvard-educated banker said he had never thought of quitting, not even when a finance minister publicly announced a wish to have him sacked.
He said history showed that resigning was a tool some governors used to hopefully ensure challenges were handled correctly, but history also showed that it should be the last method employed in a bid for deliver effectiveness.
"Such a tool must be employed at the right time, for the right reason, or the governor himself will have to answer questions to the public [over why he quit]," he said.
He said economic matters involved a large number of parties – from the government and politicians to businesspeople and the general public. One way or another, all were affected by an economic policy.
And in this scenario, he said it was important that the central bank maintained the public’s trust so that the public entrusted the central bank to do its job.
In the 73-year history of Bank of Thailand, only two governors quit in defiance over government pressure.
The first governor, Prince Vivadhanajaya, resigned over the auction of gold reserves after World War II, and ML Dej Snidvongs, the sixth governor, quit after he was forced to fix the baht at 45 against the pound sterling from Bt51.
Prasarn said the improper sacking of a central bank governor could hurt a government's credibility, highlighting Argentina as an example.
Since taking the helm of the central bank in 2011, the governor has experienced a series of storms.
Just the United States struggled to resurrect its economy, the euro zone was haunted by huge public debt.
Coupled with the situation in Japan, quantitative easing programmes by rich countries flooded the world with liquidity and added to the volatility in financial markets.
China, the only hope, has slowed down. And at home, political instability escalated, leading to the coup in 2014. The Thai economy is now a "sick man" with the lowest growth prospects among Asean nations.
Amid the unfavourable situation, Prasarn is comforted by the stability of the Thai financial sector. Thai banks are financially strong enough to perform their tasks in supporting the economy, while inflation is under control. Trust in the Bank of Thailand remains high, leading to public support whenever the institution comes under political pressure.
Prasarn said in the past five years, he had emphasised building four core values within the central bank.
Hoping that this would be continued under his successor, he said the central bank needed to maintain its integrity and not succumb to pressure and only sound warnings when necessary. The central bank should have a long-sighted vision to weigh the impact of its decisions in the long term.
And it needed to work with others as a part of society, with BOT officials now sitting on reform committees.
Last but not least, he said the central bank must be realistic. Dealing at the policy level, it needed to take into account practicality and others’ opinions.
"This job inevitably involves many types of resistance. Losing the equilibrium will cloud our judgement. It is important to maintain an emotional equilibrium and a conscience. We have a team but it is us who make the call," he said, as a message to his successor.
The twenty-second governor’s term ends in September and his successor starts in October. There is a rumour that Prasarn would join the junta government as a finance minister or deputy prime minister for economic affairs.
He said he had not been approached by the government, declining to comment more on this issue. But he did say that anyone holding a political position should win the public’s support.
"They must work with full intention. The jobs are tough. The Thai economy looks stable but the growth prospect is low. The recovery pace is slow, partly due to the export sector. Several factors are uncontrollable. Anyone taking [government] jobs needs to work hard and be patient and be able to explain the issues to society," he said.
The governor now ponders having some time off. He dreams of a slow life, after five years of early morning meetings and tight schedules to which he had to adhere despite Bangkok’s notorious traffic.
