Banknotes are conventional medium of exchange used in trade and financial obligation settlements. At present, sophisticated development in electronic-settlement, credit card, and direct debit systems have substantially reduced demand for banknotes and the burden of printing money. Yet, banknotes still play a vital role in lubricating the domestic economy. As of end-2012, outstanding volume and value of circulating banknotes in the financial system were at 4.81 billion notes worth THB1.399 trillion.
The Bank of Thailand targets annual banknotes supply in accordance with economic conditions and demand for each denomination of banknotes. In order to maintain confidence in the value of printed banknotes, the BOT strictly complies with the Currency Act B.E. 2501, requiring all circulated banknotes to be fully-backed at all time by Currency Reserve. Legitimate components of Currency Reserve include gold, certain foreign currencies, securities, and other assets prescribed by the law. Currency reserve must be maintained and separated from other BOT’s assets so as to ensure that the amount of circulated banknotes does not outpace value of existing currency reserve.
Freshly printed banknotes from the BOT Note Pringing Works will be transported to 10 Banknote Operation Centers nationwide. Each center will distribute new banknotes through cash centers of commercial banks, which will eventually pass on these new banknotes to the general public through branches of commercial banks. Moreover, BOT’s Banknote Operation Centers also redeem damaged banknotes for the public, verify authenticity, and destroy banknotes that are not in shape for circulation.
Key statistics and regulations relevant to banknotes at Currency Reserve can be found at:
- Currency Reserve
- Circulating banknotes
- Regulations governing banknotes issuance