Introduction to the Thai Bank Museum The Evolution of Money The Evolution of Banking The Prototype for Thai banks Siam Commercial Bank’s Advance to the present
Introduction
The Book Club
The Siam Commercial Bank Company Limited
The Thai Panich (Siam Commercial) Bank
SCB Historical Highlights during 1957 – 2007
The SCB and the development of commercial banking in Thailand
The Government Savings Bank
The Bank of Thailand

The need for a national bank to act as the government’s financial representative had been recognized for a long time. When the Siam-Chinese Bank went bankrupt during a financial crisis in 1914, the Finance Minister considered setting up a central bank to control financial operations of the government and commercial banks.

The Finance Ministry hired Sir Bernard Hunter, an English banker, to consider the possibility of changing The Siam Commercial Bank into the Thai National Bank. He reported to the minister on 4 February 1914 and recommended that the SCB be transformed into the National Bank, as a means of developing the country’s banking system.

Since the government was not then ready to take any action, the idea of establishing a central bank was placed on hold. But when World War II broke out in Europe in 1939, the idea came back into prominence.

The government considered that the people’s fear of the war would compel them to withdraw their money from the commercial banks and large amount of withdrawals would weaken the financial status of these banks. Establishing a central bank would be a way of bolstering the stability of commercial banks.

Besides the central bank could be a source of loan capital to support government policies to develop industry and commerce. Therefore in 1939 the government set up the “Thai National Bank Office” to prepare for establishment of the central bank at a suitable time.

In 1941, shortly after the Thai National Bank Office opened for operations, Japanese troops occupied Thailand and requested the government appoint financial representatives for the central bank. The Thai government then cancelled the Thai National Bank Office and subsequently the Bank of Thailand was established.

The Bank of Thailand began operations on 10 December 1942 in the office of the Hong Kong & Shanghai Banking Corporation (HSBC) at the end of Si Phraya Road with H.S.H. Prince [Mom Chao] Vivadhanajaya Jayanta as the first Governor. Its starting capital consisted of 20 million baht that represented profits from the government’s sale of gold and 13.5 million baht worth of assets transferred from the previous Thai National Bank Office.

The Bank of Thailand was responsible for all central bank functions, production of banknotes, acting as the government’s financial representative, and promoting the country’s financial stability. Furthermore it served as banker to the commercial banks. As the Bank of Thailand was established during the critical wartime situation, it was implicitly responsible for controlling foreign exchange.

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