Bangkok: The Bank of Thailand has shed light on its approach to purchasing public debt, emphasizing the need for clarity regarding the types of debt to be addressed. The bank stressed that resolving Thai household debt requires a structural approach while considering moral hazard and ensuring debtors can access new credit.
According to Thai News Agency, the BOT is responding to inquiries about purchasing public debt and clearing credit bureau records by highlighting the need for a clear understanding of the types of debt involved. In tackling household debt sustainably, the BOT adheres to three key principles. First, it supports good financial discipline by avoiding incentives that could lead to moral hazard, ensuring debtors remain financially responsible. Second, it aims to maintain debtors’ access to future credit, ensuring creditors can accurately assess risk and debtors can secure credit at fair costs. Third, the BOT focuses on directly solving debt issues to bolster the financial system’s stability, optimizing resource and budget use for the country’s benefit.
The complexity of Thailand’s household debt problem stems from structural issues, necessitating collaboration among various stakeholders. Comprehensive measures must be designed, considering the root causes, implementation principles, and potential side effects, to provide sustainable benefits to both debtors and the Thai economy.
