Deposit flight hits state-run bank
Panicked by rumours of rice scheme lending, GSB customers are pulling out their money in droves.
The Government Savings Bank (GSB) is a bank under the management of the Thai government since 1929, when it was known as the Savings Office. It has 930 branches across Thailand.
Accoding to the bank’s president, GSB customers have withdrawn 30 billion Baht (around 1612903 BTC or 1 billion USD) in a single day. These mass withdrawals are due to fears that the Thai government has used their savings to back loans to struggling rice farmers. Thailand is the world’s largest exporter of rice, but farmers there have not received yet 130 billion Baht in subsidies from the government.
(BAAC) Smaller Thai banks like Krungthai Bank (KTB) and the Bank for Agricultural Cooperatives (BAAC) have also seen major withdrawals, though not to the same extent as GSB.
Under a fractional reserve system in which banks hold only a small percentage of deposits, bank runs are always a single headline away. As this risk is never plainly stated to a customer opening an account, such a system can only be described as fraudulent.
Ordinary Thai citizens are now learning about this widespread scam the hard way. In relation to this incident, a Thai citizen was reported to remark, “I started to feel concerned that my money may become only paper.”
Alternatives to the fiat, fractional reserve system are however at hand. Traditional options for the preservation of wealth like gold, silver, gems and art are well-known.
For more adventurous and technologically-savvy Thais, the good news is that Bitcoin was recently confirmed as legal by their central bank, as we reported a few days.
Bitcoin is of course held by the individual, beyond the power of banks to withhold or central banks to inflate.
Bitcoin.co.th is currently open for trading. That site carries plenty of detailed tutorials in the Thai language to get Bitcoin newcomers up and running.
There is also a Thai cryptocurrency exchange group, ExchangerCoin, doing business over Facebook.
As always, do your own due diligence on these exchanges before trading.
CryptoCoinsNews has a team member on the ground in Thailand, Venzen. He offers the following explanation of the situation:
The political situation in Thailand is complex because it’s a monarchy with a parliament.The previous president, Taksin, lives in exile in Dubai after being ousted in a military coup some years back. He fled for his life but then his supporters organized for his sister, Yingluck, to be elected as the country’s first female president.Now the cabinet meets with the president (Yingluck) and her brother (Taksin) via Skype from Dubai every week… So, Taksin still runs the country! His sister is regarded as a puppet and not taken very seriously.It was Taksin who put together the rice subsidy plan for farmers, as part of his long-ago election campaign. This subsidy is a source of contention among Thailand’s neighbors in South East Asia, as such government interventions disturb the balance of the regional economy. The rice market has now became unstable.Even worse, Taksin ran away with most of that “rice subsidy,” without it ever getting to the farmers! Thus, there is a bank run for very good reason. People have been protesting in Bangkok, sometimes violently, for months trying to oust Yingluck anyway. The overall situation is a pressure cooker.
Last modified: February 19, 2014 20:23 UTC