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Bangladesh Bank

Central Bank of Bangladesh

Tina S
Tina S
Nov 22, 2009
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Bangladesh Bank, the central bank of the country, was established as a body corporate vide the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972) with effect from 16th December, 1971.
Bangladesh Bank has 9 branch offices, two in Dhaka city (sadarghat and Motijheel), and one each in Chittagong, Khulna, Rajshahi, Sylhet, Bogra, Rangpur and Barisal. The head office discharges its duties with 28 departments.

History

After the liberation war, and the eventual independence of Bangladesh, the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank. This reorganization was done pursuant to Bangladesh Bank Order, 1972, and the Bangladesh Bank came into existence with retrospective effect from 16 December 1971.

Vision

The Bangladesh Bank (BB), through ensuring the quality of services and the competence of its staff, shall operate as a modern, dynamic, effective, and forward-looking central bank to manage the country’s monetary and financial system with a view to stabilizing the internal and external value of Bangladesh Taka conducive to rapid growth and development of the economy.

Mission

To uphold the vision and in pursuant with the Bangladesh Bank Order of 1972, Bangladesh Bank’s mission is to promote and maintain macroeconomic and price stability through:

1.Formulating and implementing appropriate monetary policy consistent with the country’s national development goals;

2.Pursuing prudent policies to ensure stable internal and external value of Taka;

3.Identifying policy priorities for implementation by the Government through assessing the transmission channels and the interactions of monetary policy with fiscal, exchange rate, and other macroeconomic policies and their impact on the economy;

4.Proposing necessary legislative measures to attain the central bank’s objectives and perform its functions including strategies and regulations for and supervision of banking companies and financial institutions with the aim to providing efficient financial intermediation and financial services to large, medium, small, and micro enterprises and to pro-poor activities ;

5.Promoting, regulating and ensuring a secure and efficient payment system, including the issue of Bank Notes;

6.Giving advice to the Government on the interaction of monetary policy with fiscal and exchange rate policies, on the impact of various policy measures on the economy;

7.Analyzing priority macroeconomic issues for policy advice and dissemination of information to attain the central bank’s social responsibility.

Monetary Policy

The aim is to achieve the twin goals of containing inflation and promoting sustained and stable economic growth; provide policy advice to the Government on deficit financing and public debt management; manage the balance of payments and foreign exchange reserves; provide payment services and ensure the stability of the financial system; conduct treasury and government securities related operations; and efficiently perform other international financial activities.

Objectives


As the central Bank of Bangladesh, the broad objectives of the Bank are:

a) To regulate currency issuance and to keep foreign exchange reserves.

b) To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value.

c) To preserve the par value of the Bangladeshi Taka.

d) To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country's productive resources.

e) To Reserve all the rights of the bank.

Functions

Bangladesh Bank performs all the functions that a central bank of any country is expected to perform, and such functions include maintaining the price stability through economic and monetary policy measures, managing the country’s foreign exchange and the gold reserve and regulating the banking sector of the country.

  • Like all other central banks across the globe, Bangladesh Bank is both the Government’s banker and the banker’s bank, a “Lender of the Last Resort”. Bangladesh Bank, like most of the central banks of different countries, exercises monopoly over the issue of currency and the banknotes. Except for the 1 and 2 taka notes, it issues all other denominations of Bangladeshi Taka.
  • Bangladesh Bank has been entrusted with all the traditional central banking functions including the sole responsibilities of issuing currency, keeping the reserves, formulating and managing the monetary policy and regulating the credit system of Bangladesh with a view to stabilizing domestic and external monetary value and promoting and maintaining a high level of production, employment and real income in the country.
  • The bank acts as the banker to the government and accepts government deposits, cheques and drafts, and undertakes collection of cheques and drafts drawn on other banks.
  • The government deposits all its cash balances with the Bangladesh Bank free of interest. The bank transfers government funds from one place to another as requested by the government and its agencies.
  • Bangladesh Bank is empowered to act as the watchdog of the country's banking system, and all scheduled banks are accountable to Bangladesh Bank, which has extensive powers to ensure soundness of the banking system.
  • No bank can commence banking business in Bangladesh and no existing bank can open a new branch in or outside the country or shift any branch from one place to another without obtaining a license/permission from the Bangladesh Bank.


 

 
Keywords: Bangladesh Bank,Central Bank of Bangladesh,16th December, 1971,Bangladesh Bank Order, 1972,Government’s banker and the banker’s bank, issue of currency and the banknotes.



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