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Asia and Pacific > Thailand

You are looking at 1 - 8 of 8 items for :

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Cover Departmental Papers
Navigating External Shocks in Southeast Asia's Emerging Markets: Key Lessons and Challenges in Applying the IMF’s Integrated Policy Framework
Corinne C Delechat
,
Umang Rawat
, and
Ara Stepanyan
As relatively small open economies, South-East Asian emerging markets (Indonesia, Malaysia, Philippines and Thailand or ASEAN-4) are highly susceptible to external shocks—both financial and real—that could induce large capital flows and exchange rate volatility that could lead to foreign exchange market dysfunction. With the exception of Bank Negara Malaysia, ASEAN-4 central banks mostly have flexible inflation-targeting frameworks for monetary policy implementation. Their main policy objectives include medium-term price stability, sustainable economic growth, and financial stability. Central Banks in ASEAN-4 economies have been early pilots in the operationalization of the IMF’s Integrated Policy Framework (IPF) in 2022-23, given their experience in using multiple policy tools besides the monetary policy rate, including macroprudential measures, foreign exchange intervention (FXI), and capital flow management measures, to achieve their multiple objectives. They have welcomed the IPF as a systematic, frictions-based approach to analyze the use of these multiple tools to manage trade-offs across policy objectives. This paper takes stock of the experience from these pilots, both from the perspective of country authorities and of IMF country teams. It aims at distilling key lessons, which could be used to inform broader IPF operationalization. The IPF conceptual framework and a related quantitative model were used to assess policy trade-offs in ASEAN-4 in the event of adverse external shocks. These applications reaffirmed the importance of using monetary policy to address persistent inflationary pressures stemming from real shocks and allowing the exchange rate to act as a shock absorber. However, a complementary use of FXI could improve trade-offs between price, financial, and output stability when economies are faced with large and financial shocks that result in abrupt spikes in uncovered interest rate parity premia resulting in inefficiently tight financial conditions that could hurt growth or risking to de-anchor inflation expectations. The IPF pilots also highlighted some challenges faced when operationalizing IPF principles, notably regarding the assessment of frictions and shocks that might justify the use of FXI. In particular, country teams at times lacked sufficient information to adequately assess the extent of frictions. Moreover, the time-varying nature of IPF frictions and the non-linear effects of shocks make it difficult to assess situations when benefits of a complementary use of FXI would overweigh its costs.
Keywords:
ASEAN; foreign- exchange intervention; Inflation targeting; Integrated policy framework; capital flows; IPF pilot; market dysfunction; IMF country team; IPF model; Policy mix; IMF seminar participant; Currency markets; Exchange rates; Inflation; Southeast Asia; Global
Cover IMF Working Papers
Leakages from Macroprudential Regulations: The Case of Household-Specific Tools and Corporate Credit
Lucyna Gornicka
and
Peichu Xie
Sector-specific macroprudential regulations increase the riskiness of credit to other sectors. Using firm-level data, this paper computed the measures of the riskiness of corporate credit allocation for 29 advanced and emerging economies. Consistently across these measures, the paper finds that during credit expansions, an unexpected tightening of household-specific macroprudential tools is followed by a rise in riskier corporate lending. Quantitatively, such unexpected tightening during a period of rapid credit growth increases the riskiness of corporate credit by around 10 percent of the historical standard deviation. This result supports early policy interventions when credit vulnerabilities are still low, since sectoral leakages will be less important at this stage. Further evidence from bank lending standards surveys suggests that the leakage effects are stronger for larger firms compared to SMEs, consistent with recent evidence on the use of personal real estate as loan collateral by small firms.
Keywords:
standards survey; credit vulnerability; leakage effect; credit riskiness; bond credit ratio ma; Credit; Macroprudential policy; Bank credit; Macroprudential policy instruments; Corporate sector; Global
Cover IMF Working Papers
Synergies Between Monetary and Macroprudential Policies in Thailand
Ichiro Fukunaga
and
Manrique Saenz
A dynamic stochastic general equilibrium (DSGE) model tailored to the Thai economy is used to explore the performance of alternative monetary and macroprudential policy rules when faced with shocks that directly impact the financial cycle. In this context, the model shows that a monetary policy focused on its traditional inflation and output objectives accompanied by a well targeted counter-cyclical macroprudential policy yields better macroeconomic outcomes than a lean-against-the-wind monetary policy rule under a wide range of assumptions.
Keywords:
WP; monetary policy; loan; Taylor; housing loan; x inflation gap; Macroprudential policies; Lean-against-the-wind monetary policy rule; Dynamic stochastic general equilibrium model; Thailand; world interest rate; LTV rule; household LTV cap; Macroprudential policy instruments; Macroprudential policy; Financial sector stability; Housing; Inflation; monetary policy transmission; inflation stability; inflation gap; world interest rate shock
Cover IMF Staff Country Reports
Thailand: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This Financial System Stability Assessment paper on Thailand highlights that assets of the insurance and mutual fund sectors have doubled as a share of gross domestic product over the last decade, and capital markets are largely on par with regional peers. The report discusses significant slowdown in China and advanced economies, a sharp rise in risk premia, and entrenched low inflation would adversely impact the financial system. Stress tests results suggest that the banking sector is resilient to severe shocks and that systemic and contagion risks stemming from interlinkages are limited. Financial system oversight is generally strong, but the operational independence of supervisory agencies can be strengthened further. The operational independence of supervisory agencies can be strengthened further by reducing the involvement of the Ministry of Finance in prudential issues and ensuring that each agency has full control over decisions that lie within its areas of responsibility.
Keywords:
ISCR; CR; financial system; U.S. dollar; bank; bank resolvability assessment; cash flow; hurdle rate; recovery plan; bank distress; resolution planning; headline inflation; asset quality; Trade balance; Commercial banks; Financial sector stability; Liquidity stress testing; Macroprudential policy instruments; Global
Cover The ASEAN Way
The ASEAN Way
Sustaining Growth and Stability
Ms. Ana Corbacho
and
Mr. Shanaka J Peiris

Abstract

The first part of the book examines the evolution of monetary policy and prudential frameworks of the ASEAN­5, with particular focus on changes since the Asian financial crisis and the more recent period of unconventional monetary policy in advanced economies. The second part of the book looks at policy responses to global financial spillovers. The third and last part of the book elaborates on the challenges ahead for monetary policy, financial stability frameworks, and the deepening of financial markets.

Keywords:
BOOK; monetary policy; exchange rate; economy; inflation expectation; transmission mechanism; monetary policy framework; ASEAN economy; Association of Southeast Asian Nations-5; inflation-targeting regime; Macroprudential policy; Financial sector stability; Inflation; Foreign exchange intervention; Global; Asia and Pacific; North America; Southeast Asia; Europe; countercyclical monetary policy; Global financial crisis of 2008-2009; Caribbean
Cover IMF Staff Country Reports
Thailand: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper examines the impact of key structural fiscal reforms on growth and other macro variables in Thailand. The study simulates the impact of: a public infrastructure push; labor market policies, including an increase in the pensionable age and in provision of childcare services; and a change in the composition of taxes from income taxes to value added tax to shed light on the desired composition of additional taxes to be levied in the longer term. The results indicate that structural reforms enabling higher infrastructure investment, stronger labor participation, and more efficient taxation can raise growth significantly and contribute to addressing domestic and external imbalances.
Keywords:
ISCR; CR; financial condition; ASEAN economy; rule; loan; portfolio investment; monetary policy transmission mechanism; retirement age; inflation objective; infrastructure investment; Financial integration; Macroprudential policy; Macroprudential policy instruments; Financial sector stability; Regional integration; Global; Asia and Pacific
Cover Departmental Papers
Macroprudential Frameworks in Asia
Mr. Steven A Barnett
and
Mr. Rodolfo Maino
This Departmental Paper portrays a cross-country dimension of macroprudential policy implementation in Asia, advancing a comprehensive overview of institutional arrangements and instruments deployed by individual countries to address systemic risk, including risk concentration and interconnectedness. This book is the first comprehensive collection of papers assessing the existing institutional arrangements for macroprudential policies in Asia.
Keywords:
DPPP; DP; monetary policy; central bank; financial system; inflation targeting; interest rate; financial crisis; systemic risk; banking sector; Financial sector stability; Macroprudential policy; Systemic risk; Macroprudential policy instruments; Global; Asia and Pacific; Central Asia
Cover Policy Papers
Macroprudential Policy - An Organizing Framework - Background Paper
International Monetary Fund
MCM conducted a survey in December 2010 to take stock of international experiences with financial stability and the evolving macroprudential policy framework. The survey was designed to seek information in three broad areas: the institutional setup for macroprudential policy, the analytical approach to systemic risk monitoring, and the macroprudential policy toolkit. The survey was sent to 63 countries and the European Central Bank (ECB), including all countries in the G-20 and those subject to mandatory Financial Sector Assessment Programs (FSAPs). The target list is designed to cover a broad range of jurisdictions in all regions, but more weight is given to economies that are systemically important (see Annex for details). The response rate is 80 percent. This note provides a summary of the survey’s main findings.
Keywords:
PP; economy; risk; contagion risk model; respondents issue risk warning; risk identification; systemic risk; leverage risk; contagion risk; risk weight; asset quality; Macroprudential policy; Financial sector stability; Emerging and frontier financial markets; Systemic risk assessment; Systemic risk; Global