PRESENTATION TPOIC: ON

MONETARY POLICY:

VIEWS OF BANGLADESH

MADE BY:

Amit Kumar SarkerStudying MBA(Major in HRM) & Author of PublicationBangabandhu Sheikh Mujibur Rahman Science & Technology University, Gopalganj-8100, BangladeshEmail: amit.bsmrstu@gmail.com; Facebook: fb.com/amitsarker.alok

For more info to contact:Mob: +8801723-839393 (Bd)Twitter: twitter.com/amitsarker_alokGoogle+: plus.google.com/+amitbsmrstuAlternative Mail: amit_bsmrstu@yahoo.com

Others info:Date of Birth: 2nd AugustPresent address: Bijoy Dibos Hall, Bangabandhu Sheikh Mujibur Rahman Science & Technology University, Gopalganj-8100, Bangladesh

MONETARY POLICY

Monetary policy is the term used by economists to describe ways of managing the supply of money in an economy.

And Monetary policy includes all monetary decisions and measures irrespective of whether their aims are monetary and non-monetary, all non-monetary decision and measures that aim it affecting the monetary system.

TOOLS OF MONETARY POLICY GENERALLY USED

Monetary base: Monetary policy can be implemented by changing the size of the monetary base.

Reserve requirements: The monetary authority exerts regulatory control over banks. Monetary policy can be implemented by changing the proportion of total assets that banks must hold in reserve with the central bank.

Discount window lending: Discount window lending is where the commercial banks, and other depository institutions, are able to borrow reserves from the Central Bank at a discount rate.

Interest rates: The contraction of the monetary supply can be achieved indirectly by increasing then nominal interest rates.

Currency board: A currency board is a monetary arrangement that pegs the monetary base of one country to another, the anchor nation.

TOOLS OF MONETARY POLICY

THIS COUNCIL CONSISTS OF THE FOLLOWING GOVERNING BODY

Source: General Banking by L.R. Chowdhury

MONETARY POLICY DECISION- MAKING PROCESS

RECENT AMENDMENT/ADDITION

BB Governor's Address at Monetary Policy Statement announcement ceremony for H1 FY16 Date: 30 July, 2015,

Time: 11.00 a.m. Venue: Jahangir Alam Conference Hall, BB

FRAMEWORKS OF BANGLADESH’S MONETARY POLICY

KEY CHALLENGE FOR MONETARY POLICY OF BANGLADESH

There Exist a Non-Monetized Sector:

In Bangladesh there is a existence of non monetized economy

in large extent people areas where many of the transaction are

of the barter type and not monetary type .

Excess Non Banking Financial Institutions (NBFI):

As the economy launch itself into a orbit of economic growth and

development, the financial sector comes up with great speed as a

result many non banking financial institutions (NBFI)

Existence of Unorganized Financial Markets:The financial markets help in implementing the monetary policy ,in many developing countries the financial markets especially the money markets are of an unorganized nature and in backward conditions Higher Liquidity Hinders Monetary Policy:In rapidly growing economy the deposit base of money commercial bank is expanded, this creates excess liquidity in the system Money Not Appearing In an Economy: Large percentage of money never comes in the mainstream economy, rich people, traders ,business and other people prefer to spend rather than to deposit money in the bank

Time Lag Affects Success of Monetary Policy : The success of the monetary policy depends on timely implementation of it ,however ,in many cases unnecessary delay is found in implementation of the monetary policy

Monetary and Fiscal Policy Lacks Coordination

RECOMMENDATION

In Bangladesh, capital markets should be expanded and organized enough to succeed the monetary policy.

The credit control mechanisms like open market operation, bank rate, etc. should be effective.

A narrow bill market should make the discount rate effective.

Banking habits are also underdeveloped which hampers the effectiveness of monetary policy seriously. So banking

habits should be developed.

Steps should be taken to abolish the existence of liquidity trap.

To run the monetary policy smoothly and effectively, it is essential to pay sufficient attentions to increase the GDP.