Bangkok, March 26 – Economists warn European Bank stocks plummet. Reflecting the problem of confidence in the financial institution system has not resolved. Preparing for tight money from the global financial crisis and central bank interest rate hikes advises Thais not to rush to raise interest rates
Mr. Anusorn Tamajai Former Audit Committee The Bank of Thailand revealed that financial institutions in Europe continued to plummet. There are risks and uncertainties over the future of Germany’s big bank Deutsche Bank and France’s big bank Societe Generale. The two banks are stable. like the Deutsche Bank It just announced its highest 2022 profit in 15 years during the Swiss bank Credit Suisse. There were problems before the merger with UBS. Deposits and investments flowed into Deutsche Bank. It is a sudden increase in liquidity for the bank. The Bank used this excess liquidity to buy back the subordinated debentures (Tier 2 Suborinated Debt) before maturity.
instead of the market interpreting it positively. But looking at the negative that The future of the bank’s business is likely to be sluggish due to the financial crisis in Europe. and uncertain about economic conditions and future loan growth prospects These all reflect problems of confidence in the global financial institution system that has not yet resolved. despite the positive signs In the event that the balance of deposits and investments from large banks gradually flows back to central banks and small banks. Reflecting the confidence of depositors and investors in the United States towards the central banking system began to improve.
Mr. Anusorn said that due to the tight money situation Many countries are still unable to control their inflation targets. May have to raise interest rates to control inflation. But the problem is worrisome now. May cause tight money (Tight Money) in some countries, the economy begins to recover. There is a growing demand for credit and capital. But the supply of money and credit is limited. It is difficult for households and entrepreneurs to access credit. While in some countries the economy has not yet recovered. Local banks are cautious and rigorous in lending. causing the business sector and the investment sector to not receive credit Finding International Funding There may be another problem of stability of world financial institutions. While the global financial market fluctuates wildly. Difficulty in finding funding that the central banks of many countries Led by the US Federal Reserve, Europe, UK, Japan, joined together to inject liquidity into the global financial system several days ago. It was a right decision, quick and up-to-date.
Mr. Anusorn continued that “Thailand” has not yet had a problem of tight money. If considering the loan to deposit ratio and BE bills at 91-92, together with capital inflows The balance of payments remains positive. In the short term, there is nothing to worry about. But the loan interest rate will continue to increase. Real returns on bank deposits remain negative. and real income decreased due to high inflation causing overall real savings in the country to decrease Making policies to stabilize the economy in the short term Therefore, it must act in a “rule-based” manner (Rule-based Stabilization Policy) rather than discretion. (Discretionary Policy) must show the public the goals of the state policy.
The Bank of Thailand must use the “policy interest rate” as a tool and mechanism to pass on to the financial institution system. Monetary Policy Committee Therefore, there is no need to accelerate the interest rate hike. At the meeting on March 29, and should let the baht move with the market. – Thai News Agency
Source: Thai News Agency