Harvard-Trained Central Banker Uses Meditation as Risks Rise

  • Governor seeking stability as political, trade risks rise
  • Bank of Thailand has kept rates unchanged for 18 months

A sluggish economy under military rule, market turmoil following the king’s death -- and now, Donald Trump. These are on a growing list of risks faced by Thailand’s central bank governor in his first year in office.

His way of keeping it all balanced: meditation. As a devout Buddhist, Veerathai Santiprabhob meditates daily for about half an hour and spends an even longer time on weekends sitting in solitude.

Veerathai Santiprabhob

Photographer: Brent Lewin/Bloomberg

“You need to have peace of mind in a very volatile world,” Veerathai said in an interview at his office in Bangkok, overlooking the nation’s biggest river, Chao Phraya, which runs through the capital.

The 46-year-old economist with a doctorate from Harvard University has kept interest rates unchanged near a record-low since he took office in October, despite calls from investors and the International Monetary Fund to do more to spur an economy that’s been hit most of this year by declining exports, deflation and weak private investment. His focus has been on striking a balance between supporting the economy without fueling a consumer debt bubble.

“When the party gets going, you have to take the punch bowl away -- you have to do the things people might not like because you take a different time horizon,” he said. Meditation gives “you strength to do what you think is needed to be done.”

Global Risks

While Asian central banks from India to Indonesia have been pumping more stimulus into their economies, the Bank of Thailand has left the benchmark rate at 1.5 percent since lowering it in April last year, and is set to keep it there next week, according to economists surveyed by Bloomberg. Veerathai, the son of a former police chief, said stable policy was needed to keep risky behavior in check among indebted consumers and businesses and save ammunition for next year, if there’s a marked downturn in trade.

“Global risks are more of a concern,” he said. “If there are any major adverse incidents occurring, the policy space will help us get through that.”

Like policy makers around the world, Veerathai has had to grapple with those global political events -- from the U.K.’s decision to leave the European Union to Trump’s unexpected victory in the U.S. election -- and their ripple effect across financial markets.

“The impact of geopolitical factors on global capital markets was perhaps more than what I had expected,” Veerathai said. “The tension will heighten over time. We have to look at the interaction between economic conditions and politics, and that has to be taken into account in our macroeconomic analysis.”

As a former vice president at Thailand’s second-largest lender, Siam Commercial Bank Pcl, and head of strategy at the Stock Exchange of Thailand, Veerathai said his knowledge of financial markets is helping him navigate those risks. He is now encouraging his staff to go out and gather more diverse views outside of the central bank.

‘Complex’ World

“The economic world and the financial world have become more complex, and the relationship between the different types of financial markets have become more complex,” he said. “It has been helpful that I had experience in commercial banking, in capital markets and in public policy. That helps me understand the complexity of the issue.”

His markets experience has also come in handy in his work with U.S. businesses in the regional grouping, the Association of Southeast Asian Nations. Alexander Feldman, president of the U.S.-Asean Business Council in Washington, said Veerathai is a leader across a range of issues the group discusses annually with Southeast Asian central banks.

Veerathai Santiprabhob

Photographer: Brent Lewin/Bloomberg

“Governor Veerathai has a deep knowledge of the critical issues driving Asean’s financial integration and has always been a quick study,” said Feldman, who served as an Eisenhower fellow along with Veerathai in 2013. “He always asks the tough questions but also is willing to work collectively to find solutions that work for the U.S. business community, Thailand and Asean.”

The youngest governor of the Bank of Thailand in four decades when he took office, Veerathai is no stranger to managing financial market risks. After a stint at the IMF in Washington as an economist, he returned to Thailand in 1997 in the midst of the Asian financial crisis. He joined the fiscal policy office in the Ministry of Finance and played a key role in developing economic stimulus measures and initiatives to help financial institutions hurt by the currency’s collapse.

Currency Pressure

His Ph.D. thesis at Harvard University, where he graduated at the age of 24, was on financial liberalization in East and Southeast Asia, advised by professors Dwight Perkins and Richard Cooper, an ex-chairman of the Federal Reserve Bank of Boston.

“Veerathai has always been mature beyond his actual age,” said Pakorn Peetathawatchai, a vice president of the Stock Exchange of Thailand who has been friends with the governor since their studies together in the U.S. “His maturity reflects in his ability to listen and learn from others.”

The governor will need to steer the economy next year through Thailand’s own set of political risks: the death in October of King Bhumibol Adulyadej, who was seen as a pillar of stability in a country that’s been beset by coups, and possible elections next year. That’s on top of the threat of the U.S. raising trade barriers with Asia and the Federal Reserve tightening monetary policy at a faster pace, hurting emerging-market assets.

So far, the Thai currency has been cushioned by the nation’s strong foreign-currency reserves -- at $176 billion, they cover more than 10 months of import needs, according to Citigroup Inc. The baht has gained 1 percent against the dollar this year.

Veerathai said he wants to maintain stability, and moderation -- a key practice of his spiritual beliefs -- is essential to achieving that.

“We want to ensure the long-term stability for the economy, and the principal of moderation is the key,” he said. “The concept of Buddhism that I practice, and I have very much benefited from, is one of moderation.”

— With assistance by Suttinee Yuvejwattana

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