Bank of Thailand's BSF faces slew of criticism.

The Bank of Thailand's mechanism to inject liquidity to help stabilise the debenture market has yet again been met with criticism from one of the central bank's alumni, with the main objection centring on the move's failure to effectively address the problem's root causes.

Amid risks that many corporations will experience a liquidity shortage, the central bank agreed to set up a 400-billion-baht Corporate Bond Stabilisation Fund (BSF) to provide bridge financing to high-quality firms with bonds maturing during 2020-21.

The fund is a pre-emptive move to prevent the impact of the coronavirus pandemic from affecting financial stability.

The scheme does not cover non-investment-grade bonds, as these instruments are favoured by high-net-worth investors who are more sophisticated.

The outstanding total on the Thai corporate bond market amounted to 3.6 trillion baht in February, accounting for more than 20 percent of GDP.

To be eligible for the BSF, corporate bond issuers must have raised the majority of their funding needs through other means such as bank loans or capital increases, have a clear long-term financing plan and meet other conditions as set out by the BSF's investment committee later.

But the move has drawn both advocates and critics, with the latter camp arguing that the planned corporate bond purchases go beyond the central bank's remit and any damage could come at a cost to the public.

Onetime finance minister and former central bank deputy governor Thirachai Phuvanatnaranubala was...