The government has planned to take a series of measures including formulation of a stress test guideline taking into account macro economic shocks to ensure the country's financial stability.
Finance Minister AHM Mustafa Kamal disclosed the government's latest initiative while announcing the national budget for fiscal year (FY), 2020-21, at the parliament in Dhaka on Thursday.
"To maintain financial stability, a number of steps will be taken in the future, which includes preparation of a concept paper on macro-prudential policy, drafting a financial stability map taking international best practices into consideration, and formulating a stress test guideline taking systemic risks into consideration," the minister explained.
Talking to the FE, a senior official of the Bangladesh Bank (BB) said different countries including Japan and Sweden have already assessed the impact of Covid-19 on financial stability of their countries using the stress test mechanism.
"We need a stress test guideline taking into account macro economic shocks to know the resilience of banking sector," the central banker explained.
Besides, the government has already taken necessary reform measures to establish an improved loan culture in the country so that the loan recipients can repay their loans in time, according to the minister.
"Central database for large credit (CDLC) has been established for close monitoring of large loans and strengthening the monitoring system of banks and financial institutions," the minister noted.
On the other hand, the government has been implementing various activities to bring about reforms and development in banking, capital market, insurance and other financial sectors.
The minister also said considering the importance of financial inclusion, the central bank of Bangladesh is working to ensure the formalised banking facility is available to the disadvantaged people in both urban and rural areas.
To streamline financial inclusion operations, the government is formulating a policy titled 'National Financial Inclusion Strategy-Bangladesh'.
"The central bank is also working to provide necessary assistance to the financial market to ensure the commercial success of FinTech or the expansion of financial technology and creative financial technological initiative," the minister added.
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