(2) Statement by Finance Minister Kaya
An agreement of opinion was reached by Japan and Thailand some time ago on the necessity of financial co-operation between the two countries. The concrete measures for the realization of the point which were agreed upon included the placing of the baht currency on a par with the yen currency and the use of the yen currency in the settlement of accounts between the two countries.
A further step to force closer economic ties between Japan and Thailand was taken today when an agreement was signed under which the Bank of Japan will make a loan for ¥200,000,000 to the Thai Finance Ministry.
In January of this year Thailand declared war on America and Britain in conformity with the Japan-Thailand Treaty of Alliance.
Promptly both America and Britain moved to freeze Thai credits and assets in their territories. The objective of this move was to weaken the foundations of the Thai currency with a view to causing disturbance in the economic circles of Thailand.
In order to meet the hostile acts of America and Britain and to hasten the victorious conclusion of the war which it had joined on the side of this country, Thailand found it necessary to strengthen its financial and economic position.
Thailand approached Japan with a request for a loan of ¥200,000,000 which would be necessary to finance the necessary measures for bolstering Thai finance and economy.
The Imperial Government gave favorable consideration to the Thai proposal. This attitude was in consonance with the spirit of the Japan-Thailand Alliance which called on this country to move to increase its economic relations with Thailand. Arrangements have thus been made for the Bank of Japan to advance ¥200,000,000 to the Thai Finance Ministry.
The present agreement will make it possible for the Thai Finance Ministry to borrow funds in the yen currency from the Bank of Japan whenever the need arises and use them as reserve against note issues. There is no doubt of the effect of the present deal on Thailand which will be to consolidate that country's financial and economic position.
According to information to hand yesterday, Thailand has completed all legislative procedure necessary to enforce the measure stipulating the use of yen currency as reserve against note issues in Thailand.
The present loan agreement, I have no doubt, will be an occasion for closer collaboration between Japan and Thailand in the economic field.