BB more 'matured' than before, says Salehuddin
Wednesday, 29 April 2009
FE Report
The country's immediate economic challenge is to face the global financial recession, Bangladesh Bank (BB) Governor Salehuddin Ahmed said Tuesday.
"The immediate challenge of the economy is to face the recession, but we should not forget about our long-term goals like poverty alleviation," the central bank chief told reporters after inaugurating the country's first Currency Museum on the executive floor of the BB.
He also said the country's long and medium term economic policies should be inward looking to help poverty alleviation through creation of employment opportunity. However, there should be an ad hoc policy to stem the current impact of global recession on the economy.
Mr. Ahmed, who will be ending his four-year tenure as the Governor of the central bank on Thursday, said the long-term economic polices should be designed in such a manner that those contribute to income generation, rapid industrialisation, creation of more jobs and ensure access to finance.
"The economic prospect looks good if we can handle the issues properly," the BB governor said, adding that Bangladesh is now better position in the South Asia on macro-economic performance.
The financial sector remained quite stable while the foreign exchange reserve stood at a comfortable level, rising to the record level of 6.4 billion as of Tuesday, he added.
Mr. Ahmed, who worked with three successive governments since his appointment as Governor on May 1, 2005, said the central bank has carried out its tasks taking up a professional approach while maintaining a sort of 'symbiotic' relationship with the government.
The outgoing governor said the central bank has achieved its successes in strengthening the banking supervision and monitoring activities as well as improvement of the quality of loans during his tenure.
"The BB has become more or less matured and, in future, it'll be much more mature," the central bank chief said, adding that the full automation of the BB, including automated clearing house and credit information bureau, would be completed by next year, making it a truly digital central bank.
Regarding competition among the banks and non-banking financial institutions (NBFIs), the BB governor said the monetary policy should target at stimulating a competition among the banks and NBFIs to stop the practice of "grouping" to set the interest rates.
He also said the governance of the banks and NBFIs should be strengthened to help reduce the interest rate spread. "At the same time, it has to be ensured that the depositors are not deprived," he added.
The BB governor also said the central bank had tried to reduce the interest rate spreads through moral persuasion over the years, but later dictated the lending rate, though temporarily, for specific areas as the situation changed due to the global recession.
In reply to another question, he said the financial stimulus package is the first step on the part of the government in accordance with its capacity. Follow up measures could be taken later as soon as the situation becomes clearer. "The situation would be clear by June this year," he added.
The central bank chief admitted that the pace of automation of the central bank had been slow. He also regretted the Bangladesh Bank's inability to make economic projections like may other central banks.
The outgoing governor also said he would go for rest for a certain period and then give his attention to professional works and writing.
The country's immediate economic challenge is to face the global financial recession, Bangladesh Bank (BB) Governor Salehuddin Ahmed said Tuesday.
"The immediate challenge of the economy is to face the recession, but we should not forget about our long-term goals like poverty alleviation," the central bank chief told reporters after inaugurating the country's first Currency Museum on the executive floor of the BB.
He also said the country's long and medium term economic policies should be inward looking to help poverty alleviation through creation of employment opportunity. However, there should be an ad hoc policy to stem the current impact of global recession on the economy.
Mr. Ahmed, who will be ending his four-year tenure as the Governor of the central bank on Thursday, said the long-term economic polices should be designed in such a manner that those contribute to income generation, rapid industrialisation, creation of more jobs and ensure access to finance.
"The economic prospect looks good if we can handle the issues properly," the BB governor said, adding that Bangladesh is now better position in the South Asia on macro-economic performance.
The financial sector remained quite stable while the foreign exchange reserve stood at a comfortable level, rising to the record level of 6.4 billion as of Tuesday, he added.
Mr. Ahmed, who worked with three successive governments since his appointment as Governor on May 1, 2005, said the central bank has carried out its tasks taking up a professional approach while maintaining a sort of 'symbiotic' relationship with the government.
The outgoing governor said the central bank has achieved its successes in strengthening the banking supervision and monitoring activities as well as improvement of the quality of loans during his tenure.
"The BB has become more or less matured and, in future, it'll be much more mature," the central bank chief said, adding that the full automation of the BB, including automated clearing house and credit information bureau, would be completed by next year, making it a truly digital central bank.
Regarding competition among the banks and non-banking financial institutions (NBFIs), the BB governor said the monetary policy should target at stimulating a competition among the banks and NBFIs to stop the practice of "grouping" to set the interest rates.
He also said the governance of the banks and NBFIs should be strengthened to help reduce the interest rate spread. "At the same time, it has to be ensured that the depositors are not deprived," he added.
The BB governor also said the central bank had tried to reduce the interest rate spreads through moral persuasion over the years, but later dictated the lending rate, though temporarily, for specific areas as the situation changed due to the global recession.
In reply to another question, he said the financial stimulus package is the first step on the part of the government in accordance with its capacity. Follow up measures could be taken later as soon as the situation becomes clearer. "The situation would be clear by June this year," he added.
The central bank chief admitted that the pace of automation of the central bank had been slow. He also regretted the Bangladesh Bank's inability to make economic projections like may other central banks.
The outgoing governor also said he would go for rest for a certain period and then give his attention to professional works and writing.