During the outbreak of the Second World War in Asia known as the Greater East Asia War, Japanese forces invaded Thailand's territory and remained based in Thailand so as to counter the expected invasion by the opponents from neighboring countries. At that time, Thailand inevitably surrendered to the situation and needed to sign a military alliance with Japan. The proposal for the establishment of a central bank in Thailand with the Japanese officials as consultants and heads was suggested for the Thai Government to consider. To protect the country's monetary stability against the profound impact of the foreign policies, the Bank of Thailand was thus established according to the Bank of Thailand Act B.E. 2485 as notified on April 16, B.E. 2485 with the official opening on December 10 that same year.
According to Section 5 of the above-mentioned Act, a central bank to be called the Bank of Thailand was constituted for the purpose of taking over the management of the note issue from the Ministry of Finance and of carrying on such business as pertain to central banking in accordance with the provisions of the Act and the Royal Decrees issued.
For that reason, the authority and duties associated with banknotes were wholly transferred from the Currency Division, Treasury Department, Ministry of Finance to the Bank of Thailand.
The Royal Decree Regulating the Affairs of the Bank of Thailand B.E. 2485 specifies that the Bank of Thailand is authorized to transact the serveral kinds of central banking business including the issue, management, printing of notes and banknotes as well as other printings as approved by the Minister and the management of the currency reserve. Additionally, Section 14 of the Currency Act B.E. 2501 states that the Bank of Thailand shall continue to have the power to print, manage and issue the notes of the Government under the law governing the Bank of Thailand.
The Bank of Thailand also has the sole right to issue banknotes (Bat Thanakarn) in Thailand. The issue and management of banknotes are conducted by the Bank of Thailand in the Issue Department and are separated and kept wholly distinct from its other business. Until such time as the international monetary position becomes sufficiently clear and stable, the issue and management of bankontes by the Bank of Thailand are governed by the provisions of the laws on the currency system and the term note used in the said laws shall be deemed to include banknotes issued by the Ban