Thai cabinet approves law to allow central bank to invest in equity


  • Banking
  • Tuesday, 22 Mar 2016

The headquarters of the Bank of Thailand are pictured in central Bangkok, Thailand, in this February 29, 2016 file photo. REUTERS/Athit Perawongmetha/Files GLOBAL BUSINESS WEEK AHEAD PACKAGE- SEARCH 'BUSINESS WEEK AHEAD March 21' FOR ALL IMAGES

BANGKOK: Thailand’s cabinet on Tuesday approved a law change to allow the central bank to invest international reserves in equity instruments overseas to help diversify risks, the central bank governor said.

The main purpose of the change was to broaden the investment of international reserves amid new challenges and volatility in global financial markets, Bank of Thailand Governor Veerathai Santiprabhob told reporters.

“This will make risk management more effective. It’s not the set up of a sovereign wealth fund,” he said, adding some countries’ currencies and interest rates were moving in opposite directions to stock markets.

Thailand’s international reserves stood at US$170.9bil (RM684.7bil) as of March 11.

The central bank may initially invest only 3%-4% of the reserves in equity instruments, such as shares and funds linked to stock indices, depending on an investment framework decided by its committees, Veerathai said.

The amended law needs National Legislative Assembly approval.

The cabinet also approved the third phase of a central bank financial sector master plan that would enhance competitiveness of Thai financial institutions and promote financial access, Veerathai said.

The plan would also promote electronic financial and payment services and support regional trade and investments, he said. - Reuters

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