Sino-Thai financial cooperation, especially in bilateral currency exchanges, has reduced transaction costs and facilitated trade and investment. In January 2021, the central banks of China and Thailand renewed a bilateral currency swap agreement. The statement from the People’s Bank of China (PBOC) says the swap line has a size of 70 billion yuan (about $10.8 billion), or 370 billion Thai baht. It will be valid for a period of five years and may be extended by mutual consent.
In 2014, the central banks of China and Thailand signed a Memorandum of Understanding on Chinese Renminbi (RMB) clearing settlement in Bangkok, capital of Thailand. At the same time, the two sides renewed the bilateral currency swap agreement, aimed at supporting trade and investment in local currencies as well as strengthening bilateral financial cooperation between the two countries. In addition, it would strengthen the confidence of the private sector in the use of local currencies in their cross-border transactions. A year later, the Industrial and Commercial Bank of China (Thai) Public Company Limited announced in Bangkok the official launch of the RMB clearing bank service.
The growing use and internationalization of the RMB is part of an enhanced regional financial cooperation. The Chiangmai Initiative, adopted at the 10+3 finance ministers meeting in May 2000, was the first substantive step to strengthen financial cooperation. Its main content was to expand the size of the original ASEAN Currency Exchange Facility, while establishing a bilateral currency exchange network between 10+3 nations, to help countries members to overcome short-term balance of payments difficulties and to stabilize financial markets. In 2011, the central banks of China and Thailand signed the bilateral currency swap agreement (BSA) between the Chinese yuan and the Thai baht, the first of its kind under the Chiang Mai initiative.
(With input from statements by the People’s Bank of China, PBOC)