Banknote Issues and Currency Reserve
The important responsibility of the Bank of Thailand (BOT) is to design, print, issue, and manage banknotes to ensure that banknotes in circulation are sufficient as means of payment for the economy. The Banknote Management Group was thus set up to be directly responsible for printing and issuing of Thai banknotes.
The Bank of Thailand is directly responsible for printing and issuing banknotes for circulation. The number of banknotes issued each year depends on the countrys economic condition and the public demand for each banknote denomination. And the growth rate of banknote value in circulation is line with the country's economic growth.
The Minister shall notify in the Government Gazatte the type, denomination color, size and other characteristics of the notes to be issued.
According to the Currency Act B.E. 2501, No Notes shall be issued save in immediate exchange for :
1. Notes previously issued, being withdrawn from circulation, or
2. Any one of the assets of equal value specified in Section 30, which is held for the Currency Reserve Account maintained in accordance with Section 26.
Therefore, all banknotes in circulation are fully backed by the currency reserves at all times.
For the purpose of maintaining the stability of the currency, the Bank of Thailand shall maintain a currency reserve, here in after to be called the "Currency Reserve".
The following assets shall be lawful components of the Currency Reserve :
2. foreign currencies which are convertible currencies or any other currencies prescribed by a Ministerial Regulation,
which must be in the form of deposit with a bank outside the Kingdom or with an internationa financial institution,
3. foreign securities payable in foreign currencies as stated in 2.
4. gold and foreign assets paid as subscription to the International Monetary Fund,
5. Reserve Tranche Purchase Certificate
6. Special Drawing Right Certificate,
7. Securities of the Thai Government payable in foreign currencies as stated in 2. or in baht,
8. domestic bills which the Bank of Thailand is permitted to purchase or rediscount, provided that the total value thereof does not exceed 20 per cent of the total amount of notes issued.
With respect to the assets stated in 1 2 3 4 5 and 6 above, the Bank of Thailand shall be required to maintain their total value at not less than 60 per centum of the notes issued.