Dr Veerathai Santiprabhop is the 23rd governor of the Bank of Thailand and the youngest ever at the age of 45, when he assumed the prestigious office.
Dr Veerathai will complete two years in his position on October 1. On this occasion, the governor sat down for a candid talk with Thai PBS news anchor Nattha Komolvadhin on a wide range of issues, ranging from the global economy and Thai economy to the life styles of a younger generation and work-life balance.
The global economy seems to be heating up, especially following the meeting between German Chancellor Angela Merkel and US President Donald Trump in Brussels, in May, which did not go well. Merkel later said that, from now on, the relationship between Germany and the US may not be smooth. How this will impact on global economy?
Today, the global economy is gradually recovering–although, in the meantime, risk factors are increasing as well. Risk may stem from the policy changes of President Trump, including policy on international relations and policy on the international trade, which may affect global geopolitics.
Likewise, problems in Europe, such as Brexit or the potential of a political backlash to the election result in France by an anti-globalization movement could pose challenges to the unification of Europe.
Overall though, the global economic recovery is reflected in the IMF adjusting up its projection of the global economy for the first time in six years in April, 2017.
How does the central bank brace itself to cope with these risks and volatilities?
The central bank’s pivotal role is to maintain economic stability, but it is not to restructure the economic system or to resolve many other issues.
Let me explain the mandate of central bank in maintaining economic stability. This is like building a good buffer system for a ship so that it won’t sway when struck with force. And we have to look at the ship management to make sure that the oil won’t leak.
In the wake of increased global volatility, our job is getting more difficult. People may not think of us or acknowledge our hard work when everything goes well. But when crises arise, all eyes will be on us and the public will start asking why the central bank could not maintain stability.
Our job is to make sure that we have a necessary buffer in place and to keep the Thai economic ship moving forward in the direction and at the speed that we want. Today, I can say that our buffer system is working quite well.
The governor of the Bank of Thailand is like the captain of a ship. So what does the captain have to do each day to make sure that the ship sails in the direction and at the speed that we want?
We have to put many factors into consideration even not our sole responsibility. We have to work with a network of central banks in other countries, the financial and capital markets, and various government regulators. We have to look at both short and long-term issues – short-term issues like checking the weather report and making assessments of its impacts. For the long term, we have to watch out for any potential fragilities and check all the systems which are important to the ship’s functioning. We have to do stress tests to test our systems, whether they are strong enough to cope with changing situations or storms at sea.
You used to compare the state of the Thai economy to a middle-aged individual who may not be as physically fit as a young man or woman, but must try to accelerate the engine to respond to the government’s Thailand 4.0 policy. Do you think you can accelerate the engine?
I would prefer to call it “overhauling”, but that is not just in response to the government’s 4.0 policy for a world in which technology is increasingly important. Therefore, we have to brace ourselves for three important issues:
- We need to increase productivity to remain competitive in all kinds of industries and business. We must think of how modern technology can increase productivity if we use it wisely.
- Increasing the resilience and immunity of Thai society and the economy for volatility, uncertainty, complexity and ambiguity (VUCA).
- Distribution of the fruits of economic development and growth for all, i.e. solving the problem of inequality which is a big problem for the country.
The banking and financial circles are facing new technological challenges such as Fintech and Bitcoin. How do you assess these challenges vis-à-vis the survival of traditional banking?
Emerging technology offers an opportunity to produce new innovations. Fintech or Bitcoin create new innovations which are beneficial to all. There are no losers or winners, but it is a matter of mutual benefit. Take for example Promptpay; there are people who feel that commercial banks will lose out from reduction in money transfer fees. But the Promptpay system offers the cheapest cost of money transfers in the world, so if everyone uses the system, the cost of cash management for everyone will reduce substantially. That also means a reduction of leaks in the payment of government sector’s welfare money. In the meantime, financial institutions also benefit from these innovations.
As the central bank governor, you must be extremely busy, do you still have time for meditation?
I can indeed not allocate the time to meditate for such a long time like before, but I do still allocate time to meditate every day. We are living in a world of uncertainty and with a lot of expectations from different groups of people in society. The meditation and mindfulness can also help make good judgments.
I used to question why we should spend 30-40 minutes for meditation. But if anybody has a chance to practice (meditation), they will realize the benefit of meditation and don’t feel that it is a waste of time.
Indeed, our efficiency at work will reduce if we do not meditate. Therefore, spending 30-40 minutes for meditation will improve our productivity and working efficiency. It is the same as why should we exercise. Somebody may attach importance to physical exercise. But don’t forget two important things about life – there is body and mind.
Working out the mind may be more important than body exercise because the mind has influence over many systems in our body.
The central bank has a very active meditation club and many Dhamma practitioners. I think this is important for an organization dealing with policy matter like the Bank of Thailand, because many issues deal with vested interests of different groups. I think inner happiness and mental stability are important issues that enable us to do our job with resolve and with regard for the benefits of society in the long run.
What are the yardsticks you use in making decisions which will affect a lot of people?
We consider the benefits of the country as a whole, the benefits of Thai society and the duration of time. Our duty is to maintain stability, so we have to look far ahead, anticipating long term consequences. Most important of all, we have to ask ourselves all the time whether what we do or decide will have advantages or disadvantages to the stability of the Thai economy.
Any advice for the younger generation about self-development and the way they think?
The world is increasingly complicated and chaotic with changes which are both predictable and unpredictable. I think the most important thing is mental stability and I would like to persuade young people to see the importance of mental development because it is an important life skill. Other important skills to develop are in the realms of technology and communication and in financial management and savings because, these days, young Thai are becoming indebted faster and longer while the proportion of NPLs is getting higher.
How would you rate your performance in the past two years and what do you want to do next?
I think other people should rate me. There are many “old problems” that I have to solve. In the meantime, we have to prepare ourselves for global changes impacting the financial system and the stability of the Thai economy. Some laws need to be updated because they are outdated. Another important issue is the sale of financial products of commercial banks. Regulations on the latter are being overhauled. We expect more reform of regulations which concern the central bank.