The BOT has a longstanding history of cooperation with Japan, including with the Ministry of Finance of Japan (JMOF), Bank of Japan (BOJ), and the Financial Services Agency of Japan.
The Bilateral Swap Arrangement (BSA) between the BOT and BOJ, acting as agent for the Ministry of Finance of Japan, was first established in 2001 to provide financial support to address short-term liquidity shortages and Balance of Payments difficulties. Under the current BSA, the BOT and the BOJ may conduct swap transactions using their local currencies (i.e. Thai Baht and Japanese Yen) for a provision of up to USD3,000 million or equivalent, in which the BOT may also swap the Thai Baht for the Japanese Yen, in addition to US Dollar.
The BOT and JMOF signed a Memorandum of Cooperation (MOC) to establish a framework to promote the use of local currencies on 9 March 2018. The MOC aims to promote the use of local currencies for trade and investment settlement between the two countries, by promoting direct exchange rate quotation and interbank trading of the Japanese Yen and Thai Baht.
On 31 March 2020, the BOT signed a Bilateral Local Currency Swap Arrangement with the Bank of Japan (BOJ) to enhance the financial stability of Thailand and Japan and to promote the usage of local currencies. Under this BSA with the BOJ, each central bank may draw the other’s local currency in exchange with their own local currency, in an amount up to THB240,000 million or JPY800,000 million, enabling them to provide liquidity support in Thai Baht and Japanese Yen to their respective commercial banks in support of their cross-border transactions.
On the banking supervision front, the BOT signed the Exchange of Letters for cooperation (EOLs) on Banking Supervision. The EOLs serves as a foundation for effective cooperation in the supervision of financial institutions operating in both countries in accordance with the principles set out in the Basel Core Principles for Effective Banking Supervision.