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Central Bank
in
Bangladesh
Presented To
Dr. Md. Azam Khan
Professor
Faculty of Business
Bangladesh University of Professionals
Presented By
Name: Hosneara Swarnaly
Id no:1407017
Definition of Bank:
The term Bank seems to
originated and/or derived from
different sources like the
Germanic word banck, the
French word banque and the
Italian word banco.
The Germanic word banck which
means a joint stock fund or heap.
The Italian word banco refers to
a bench at which the money
changers used to change one
kind of money into another and
transact their banking business.
Thus, in olden days, banking was
associated with the business of
money changing/lending.
Objectives of Bank
1. Maximizing profits
2. Saving and Lending money .
3. Creating propensity of savings amongst the people.
4. Create money against money as an alternative for enhancing supply of money.
6. Build up capital through savings.
7. Expedite investments.
8. Controlling money market.
10. Extend co-operation and advices to the Govt. on economic issues.
11. Assist the Govt. for trade& business and socio-economic development.
12. Issue and control notes and currency as a central bank.
13. Maintainand control exchange rates as a central bank.
History of
Bangladesh Bank
Bangladesh Bank came into existence on 16
December 1971.
order 1972 (Presidential Order No. 127 of 1972) .
In 1982, the first reform program was initiated,
wherein the government denationalized two of the
six nationalized commercial banks and permitted
private local banks to compete in the banking
sector.
In 1986, a National Commission on Money,
Banking and Credit was appointed to deal with the
problems of the banking sector.
The Financial Sector Adjustment Credit (FSAC) and
Financial Sector Reform Programme (FSRP) were
Monetary policy
A set of rules that aims at regulating the supply of
money in accordance with predetermined goals or
objectives. Monetary policy plays a very dominant role
in altering the economic activity and the price level in
a country. So, it should be very carefully formulated
and implemented in achieving the goals and objectives
as outlined in the Bangladesh Bank Order, 1972 below:
(1) Price stability both internal and external;
(2) Sustainable growth and development;
(3) High employment;
(4) Economic and efficient use of resources;
(5) Stability of financial and payment system.
Core functions
(i) Open market operation (treasury bills/bonds, repo,
reverse repo auctions),
(ii) Reserve ratios- cash reserve requirements (CRR) and
statutory liquidity ratio (SLR),
(iii) Secondary trading,
(iv) Discounting rate/ bank rate, and
(v) Acts as a banker to the government.
(vi) Acts as an advisor to the government.
(vii) As the central bank of Bangladesh reserves sole
responsibility to issue bank note.
(viii) Directs the growth expediting programs for the
national interest.
Economic growth
Bangladesh banks one of the key objective is to
promote and maintain a high level of production,
employment and real income of Bangladesh; and
to foster growth and development of the country's
productive resources for national interests.
Therefore, Bangladesh bank as the regulator of
country's financial system performs its
responsibilities with the view to achieve its
objectives that impacts directly and indirectly on
country's financial growth, in particular, monetary,
fiscal, and economic growth.
Conclusion
Thus the central bank plays an important role in achieving economic
growth of a developing country like Bangladesh through the various
measures discussed above. It should promote economic growth with
stability, help in attaining full employment of resources, in
overcoming balance of payments disequilibrium, and in stabilizing
exchange rates.
Over the past decade, many central banks in developing and
emerging economies have begun to place renewed emphasis on the
promotion of economic development. A central bank with a wider,
developmental mandate can make important contributions to a
countrys economic and social development and may play an
important role in improving the framework conditions for financing
the post-2015 development.
Bangladesh bank is following a vigilantly accommodative monetary
policy to sustain strong public , especially private sector credit
demand and its mechanism of control.