Interesting case of central bank cooperation..

This is an interesting developmemt and points how globalized the world is getting.

Bank of Thailand and Bank of Japan have entered into this agreement (BoJ press release).

Thailand has faced severe floods and has effected operations. It also has large number of Japanese firms and Banks. Hence, to provide stability, Bank of Thailand will provide liquidity to Thailand based institutions against Japanese Govt. securities.

Mr. Prasarn Trairatvorakul, Governor of the Bank of Thailand, announces that in order to enhance the stability of Thai financial markets and expanding the range of liquidity provisioning measures in Thailand, the Bank of Thailand is collaborating with the Bank of Japan to implement an arrangement for liquidity provision by the Bank of Thailand in Thai Baht utilizing Japanese Government Securities as collateral.

One aim of this measure is to facilitate the funding of financial institutions operating in Thailand including Japanese banks, which provide financial services to firms, including Japanese firms operating in the flood-affected areas of Thailand. Thailand has long been a recipient of Japanese investment, which has contributed to integrating Thai manufacturing into the global production chain, enhancing the quality of Thai products, research and development (R&D), and employment, as well as accelerating the economic development of the country.

An interesting arrangement..

Central Banks cooperated greatly in this crisis and even during 9/11. To see them cooperate in case of floods and accepting collateral of some other country is a nice development. Cooperation of central banks because of  globalization of financial markets…A nice case study..

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