press release announcing the BSF and two other bond purchase program

Bank of Thailand

Thai Ministry of Finance

Thailand: Securities and Exchange Commission (SEC)

Yale University

Yale University EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Documents (Series 1) Browse by Media Type 3-22-2020 Joint Statement on the Measures to Stabilize the Financial Markets Bank of Thailand Thai Ministry of Finance Thailand: Securities and Exchange Commission (SEC) Follow this and additional works at: https://elischolar.library.yale.edu/ypfs-documents Recommended Citation Bank of Thailand, Thai Ministry of Finance, and Thailand: Securities and Exchange Commission (SEC), "Joint Statement on the Measures to Stabilize the Financial Markets" (2020). YPFS Documents (Series 1). 12397. https://elischolar.library.yale.edu/ypfs-documents/12397 This Document is brought to you for free and open access by the Browse by Media Type at EliScholar – A Digital Platform for Scholarly Publishing at Yale. It has been accepted for inclusion in YPFS Documents (Series 1) by an authorized administrator of EliScholar – A Digital Platform for Scholarly Publishing at Yale. For more information, please contact elischolar@yale.edu. THHome > About BOT > ActivitiesJoint Statement on the Measures to Stabilize the Financial Markets22 March 2020          The recent development of the COVID-19 situation has led to turbulences in financial markets and sales ofassets across the world. This has affected liquidity and functioning of the financial market, and regulators inmany countries have issued several measures to stabilize the financial markets.          Even though the Thai financial system remains strong, with commercial banks holding healthy levels ofcapital and liquidity reserves, the liquidity stress and the resulting irregularity in the global financial markethave begun to affect the Thai financial market. The Bank of Thailand (BOT) has alleviated the situation throughgovernment bond purchase program amounting more than 100 billion baht during 13-20 March 2020, andthe reduction and cancelation of BOT bond issuance, while the Monetary Policy Committee has reduced thepolicy rate to the record-low level of 0.75 percent per year on 20 March 2020. BOT stands ready to makeadditional purchases of government bond to lower the volatility of the government bond yield and ensure thenormal functioning of the government bond market.          Nonetheless, the highly volatile environment has led some investors to redeem their investment units frombond mutual funds. This has forced some bond mutual funds to liquidate their bond holdings—most of whichare high-quality-at lower than fair value prices, impacting the funds’ value. This rapid decrease in the funds’value might lead to further sell of other mutual funds and result in the disruption of the bond markets, mutualShareJoint Statement on the Measures to Stabilize the Financial Markets https://www.bot.or.th/English/AboutBOT/Activities/Pages/Joint_220320...1 of 3 2/25/2022, 11:44 AMTweetfunds, and eventually the overall financial markets and economy at large.The Ministry of Finance, the Securities and Exchange Commission, and the Bank of Thailand have beenclosely monitoring the situation in the financial market, and deem it necessary to take the following measuresto stabilize the financial market and stop the liquidity problem from spreading further:          1. Bond mutual funds: BOT has set up a special facility to provide liquidity for mutual funds throughcommercial banks. Commercial banks who purchase investment units of high-quality money market funds ordaily fixed income funds that have been impacted by the decreased market liquidity will be able to use theunderlying unit trust as collateral for liquidity support from this special facility. The facility will remain open untilthe market condition returns to normal. BOT’s preliminary estimate of eligible bond mutual funds isapproximately one trillion baht.          2. Corporate bonds: The Thai Bankers’ Association, the Government Savings Bank, Thai insuranceproviders, and the Government Pension Fund have together set up a 70-100 billion baht Corporate BondStabilization Fund to invest in high-quality, newly issued bonds by corporates that cannot fully rollovermaturing corporate bonds.         3. Government bonds: BOT will continue to provide liquidity to the government bond market throughbond purchasing to ensure that the government bond marketcontinues to function normally.          These measures are expected to provide liquidity and help the normal functioning of the financial marketand help build investors’ confidence. Relevant public and private institutions will continue to work together,monitor the situation, and provide additional measures to ensure the normal and efficient functioning of thefinancial market.          As the current stress period is the result of the temporary liquidity shortage while bond mutual funds stillhold low-risk, good-quality assets, the public is asked not to rush to redeem during this period of marketabnormality. Doing so might result in prices that are significantly below fair value.Read more✉Schedule of Releases Terms and ConditionsPersonal Data Privacy Policy LinksFAQ Contact Us Inquiry/Suggestion/Complaint E-newsletterJoint Statement on the Measures to Stabilize the Financial Markets https://www.bot.or.th/English/AboutBOT/Activities/Pages/Joint_220320...2 of 3 2/25/2022, 11:44 AM

Joint Statement on the Measures to Stabilize the Financial Markets

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Joint Statement on the Measures to Stabilize the Financial Markets

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