Bangkok 24 Jul- The current Thai financial system remains stable. but also faces many risks, including the ability to repay debt The bond market has more defaults on debt payments. As for the capital market, there are fluctuations from politics and problems with good governance of listed companies.
The Bank of Thailand (BOT) revealed the results of the joint meeting between the Monetary Policy Committee (MPC) and the Financial Institutions Policy Committee (FIPC) on 7 July 2023 to monitor and assess the stability of the Thai financial system. The important issue is that the current Thai financial system is still stable. But it also faces higher risks going forward from (1) the debt serviceability of households and small and medium-sized businesses (SMEs), especially low-income households and SMEs in the manufacturing and trade sectors that may be affected by the global economic slowdown, and (2) the ability of corporate financing through the bond market. from the credit risk of some fundraiser that may be higher
The Thai economy is expected to continue expanding due to tourism and private consumption, resulting in an improvement in overall income and financial status of households and businesses. However, some households are still vulnerable as their income has not fully recovered and the cost of living has risen. Including the need to monitor the financial status of SMEs in groups that recover slowly from the COVID-19 situation and groups that may be affected by slowing exports according to the global economy. The meeting assessed that Although the aforementioned vulnerabilities of households and SMEs may cause some credit quality to deteriorate slightly. But financial institutions can manage or implement debt restructuring measures to help debtors. And will not lead to a sharp increase in bad debt (NPL cliff).
The bond market is exposed to higher risks from debt defaults that are higher than the previous year and an increase in the number of firms subject to downgrades of their credit rating and outlook in the period after individual risk factors.
While the capital market has increased volatility due to concerns about political instability in the country and problems with the governance of listed companies. As a result, investors are more cautious in investing. The meeting was of the opinion that Although the impact on the financial system is still limited and the overall private bond market remains stable. but in the future Developments in financial markets and credit risk of issuers need to be closely monitored. Including the importance of cooperation between regulatory agencies in assessing the impact. preparedness for situations and solving problems together In order to be able to respond quickly and in a timely manner if there is a situation that will affect both financial institutions, financial markets, insurance companies. and the financial system at the same time, such as problems arising from the operation of large corporations. In addition, the meeting also discussed measures to strengthen the supervision and good governance of those involved, such as public companies and/or Limited company issued securities in the capital market Audit company credit rating agency to strengthen investor confidence
In addition, the meeting was of the view that Even financial institutions, financial markets and insurance companies Overall, it has sufficient liquidity and strong financial position to support the situation where the economy is recovering much slower than expected under the 2023 macro stress test at the BOT, the Securities and Exchange Commission. and the Office of Insurance Commission have jointly prepared but in the future The regulator’s response arrangements should cover risks that may take a different form than those in the past, such as liquidity crises caused by the outflow of deposits more severely and rapidly than in the past. or other factors that may cause the financial system to be severely affected. Although the chances of this happening in Thailand are low.
The Monetary Policy Committee and the Financial Institutions Policy Committee will jointly closely monitor and assess various risks and be ready to adopt appropriate and timely policies to maintain the stability of the Thai financial system. can support the growth of the economy sustainably .-Thai News Agency
Source: Thai News Agency
