The Thai financial system has come a long way from
the crisis in 1997, having returned to stability and
consolidated on a large scale. Importantly, the
maturity and currency mismatches in commercial
banks vis-à-vis nonresidents, which were pivotal
factors in propagating the crisis, has virtually
disappeared. As of June 1997, about one-quarter of
commercial banks’ liabilities were foreign, around 49
billion US dollars, over half of which were shortterm.
At the same time, liquid foreign assets (cash
and deposits at foreign banks) amounted to only
around 3 billion US dollars implying an enormous
potential short-term foreign financing gap. In
contrast, at end-2002 banks’ liquid foreign assets
exceeded their short-term foreign liabilities by over 3
billion US dollars. The nature of sectoral exposures
has changed considerably as well with a small net
asset position vis-à-vis the other three sectors (ie. the
government, the non-bank sector, and the rest of the
world) compared with the large net liability position
of the banking sector vis-à-vis the rest of the world at
end-1997