BANGKOK: Thailand’s central bank said on Friday it is committed to maintaining economic and financial stability, after former officials expressed concerns about a plan to backstop the corporate debt market during the coronavirus outbreak.
On Tuesday, the cabinet approved a law to allow the Bank of Thailand to set up a 400 bil baht (RM53 bil) fund to buy good-quality corporate bonds that are being rolled over.
Some former central bank executives have called on the government to implement this measure through state banks, not the central bank.
The corporate bond stabilisation fund is to maintain the stability of the financial system, as the corporate debt market is a major funding source, worth 3.6 tril baht, or 20% of GDP, Assistant Governor Chantavarn Sucharitakul said in a statement.
“If there is a problem with any part of the financial market, it could lead to a chain impact on the whole financial system and the real economy,” she said. Fixing a problem will cost more than preventing it, she said.
The bond plan is among economic measures worth US$58 bil (RM251.5 bil) approved this week to battle the virus impact.
Thailand has registered 2,473 infections and 33 deaths since its outbreak began in January. It has imposed a night curfew nationwide, after having closed malls to limit the spread. – April 10, 2020, Reuters
