History of the Bank of Thailand
From the National Banking Bureau to the Bank of Thailand
The reign of King Rama IV was characterised by fostering relations and trade of Siam with foreign powers. A significant milestone of these relations was the signing of a diplomatic and commercial treaty with England by King Rama IV. The so-called "Bowring Treaty" opened doors of Siam to the world, and also led to numerous similar treaties with other countries.
With increasing ties to the West under the reigns of Kings Rama V and VI, there were several attempts by these western powers to establish a central bank for Siam to issue bank notes which would bring about substantial benefits. Yet these attempts did not materialise as the Siamese believed that these powers intended to reap the benefits for themselves. However, it was believed that in principle, having a central bank would serve as a central medium for trade and economy, but the project was shelved due to the lack of experience and expertise at that time.
The idea to establish a central bank was brought into light again following the Revolution of 1932 which established constitutional rule in Siam. According to the Economic Plan of the People's Party (the promoters of the Revolution) proposed by Pridi Banomyong (Luang Pradit Manudham), deemed it necessary to establish a central bank to act as a key mechanism to pursue economic policy of the country. However, Pridi's Economic Plan did not have the required consent by the Prime Minister and several Ministers, which prompted Prime Minister Phraya Manopakorn Nitithada to dissolve the House of Representatives.
Shortly after that, the plan to have central bank was revived, when Phraya Phahon Phon Phayuhasena seized power on 20 June 1933. However, the Minister of Finance consulted with James Bexter, the fiscal adviser to the Government at that time, who felt that it was not time to establish a central bank, given the lack of experts on banking issues in Siam, not to mention the lack of capital and the lack of a commercial banking system in the country.
The Government pushed forward the project to establish a central bank again in 1935. The Cabinet resolved to have the Ministry of Finance to propose a bill on the Establishment of the National Bank, B.E. 2478 (1935), drafted by Luang Voranitipricha. The bill proposed to incorporate the Siam Commercial Bank Ltd as the national bank. With just a mere eight articles, the bill was regarded as incomprehensive and lacking in details by the Comptroller-General, hence it was not promulgated.
On 16 December 1938, Lieutenant-General Luang Pibulsonggram was appointed Prime Minister, who in turn appointed Pridi Banomyong as Minister of Finance. Once he assumed this role, Pridi Banomyong revived again the idea to establish a central bank. He made Prince Vivat, the Director-General of the Customs Department, Adviser to the Ministry of Finance, a position hitherto held by foreigners. It was during that time when Pridi Banomyong tried to explain to these foreign advisers of the need and intentions of the government. Ultimately, these advisers cooperated well in assisting the drafting the central banking act, which could be considered the first step towards central banking in the country.
In the process of establishing the National Banking Bureau, Finance Minister Pridi Banomyong delegated Prince Viwat, the said Adviser to the Ministry of Finance, to finalise the bill which had been drafted by the foreign advisers. Ultimately, the bill on the establishment of the National Banking Bureau was presented to the Prime Minister, whose cabinet agreed to name it "Act on the Establishment of the Thai National Banking Bureau". Once the House of Representatives deliberated and passed the bill, it was promulgated and announced in the Royal Gazette on 26 October 1935. One of the reasons for establishing the Thai National Banking Bureau was to lay groundwork for central banking and manage government debts.
The Thai National Banking Bureau started its operations on 13 May 1940. The official opening ceremony was held on 24 June 1940, which coincided with the National Day then. It was only after more than a year's operation of the Bureau when the Asia-Pacific Theatre of the Second World War erupted. Japanese troops landed on Thai shores on 8 December 1941. The invading Japanese demanded that the Thai Government set up a central bank comprising Japanese advisers and department heads. Of course the Thai Government could not accept such conditions and requested that Prince Viwat draft a bill to change the status of the Thai National Banking Bureau to a central bank, with immediate effect. Hence the "Bank of Thailand Act" was promulgated on 16 April 1942. The inauguration ceremonies were held on 10 December 1942, which was Constitution Day. On the following day, the Bank of Thailand started its operations at the former offices of the Hong Kong and Shanghai Banking Corporation on Siphraya Road. Prince Viwat assumed the position of the first Governor.
The Bank of Thailand was relocated to its present place in the grounds of the Bangkhunprom Palace on 3 March 1945. A new head office building was erected on 12 July 1982, and in 2007, the headquarters was moved to the new building constructed between the Bangkhunprom and Devavesm Palaces.