Thailand’s central bank to allow banks to invest more in fintech

Thailand central bank BOT
FILE PHOTO: People walk inside the Bank of Thailand in Bangkok, Thailand, August 5, 2016. Picture taken August 5, 2016. REUTERS/Chaiwat Subprasom

BANGKOK (Reuters) – Thailand’s central bank plans to allow banks to invest more than a current limit of 3% of their capital funds in fintech, except in digital assets, an assistant governor said on Tuesday.

An official release stated that, “Technological advancement and environmental changes have shaped the global trends at an unprecedented pace, impacting all sectors including the financial sector. The Bank of Thailand (BOT) recognizes the significant impact brought by the changes, which presents both opportunities to develop better financial services and risks to the stability of the financial system. Inequality could also be exacerbated if some stakeholders were left unprepared to adapt to such changes.” 

“In the light of this, the BOT issues a public consultation on ‘Repositioning Thailand’s Financial Sector for a Sustainable Digital Economy’ to lay out the BOT’s underlying principles and policy directions in the new financial landscape. The repositioning of the financial sector needs to strike the right balance between promoting innovation and managing risks as well as allowing for flexibility in dealing with abrupt changes. The BOT welcomes comments and suggestions from all sectors to ensure that the directions and policies appropriately serve the needs of all stakeholders.”

The BOT also expects to issue rules on virtual banks in the first half of the year, Roong Mallikamas told a news conference.

The introduction of such lenders are expected to increase competition in the system, while existing banks will also be allowed to apply, she said.

“Competition will stimulate changes to make it better for the public and business,” she said.

The BOT recently said it would regulate use of digital assets as payments due to risks.

The BOT on Tuesday released a consultation on Thailand’s financial sector and the digital economy and will seek public opinions until Feb. 28.

“Innovation is good… but not every innovation is useful and good, and that needs risk management,” BOT Governor Sethaput Suthiwartnarueput told the conference.

(Reporting by Kitiphong Thaichareon, Orathai Sriring and Satawasin Staporncharnchai; Editing by Martin Petty)

Related article: The disruption in fintech is huge and going ‘gradually, then suddenly’

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