To stabilize the financial sector and tackle soaring inflation, Bangladesh's interim government has decided on a series of critical reforms, including the formation of a banking commission.
These decisions were made during a high-level meeting between Bangladesh Bank Governor Ahsan H. Mansur and Chief Adviser Professor Dr. Muhammad Yunus on Sunday, according to a press release from the Chief Adviser's office.
One of the key outcomes of the meeting was the establishment of a banking commission dedicated to implementing sustainable reforms within the banking sector.
Additionally, the government plans to release a comprehensive blueprint addressing the overall state of the financial sector within 100 days of its formation.
The meeting also decided on adjustments to the foreign exchange market. The existing band for interbank foreign exchange transactions was expanded from 1.0 percent to 2.5 percent, a move aimed at increasing market liquidity.
Under the crawling peg system, the exchange rate of the US dollar, currently set at Tk 117, may rise to Tk 118. Officials are hopeful that these measures will quickly restore liquidity and boost the volume of exchanges in the interbank market.
Addressing the ongoing inflation crisis, the meeting emphasized the importance of managing demand and supply effectively. The government plans to maintain a contractionary monetary policy while simultaneously improving the supply situation.
"Appropriate action has been taken to reduce inflation, so everyone should be patient for some more time to get relief from the pressure of inflation," Bangladesh Bank Governor Ahsan H. Mansur told UNB.
The urgency of these reforms is underscored by recent data from the Bangladesh Bureau of Statistics (BBS), which revealed that overall inflation surged to 11.66 percent in July, up from 9.72 percent in June.
Food inflation, in particular, reached a 13-year high of over 14 percent, the highest since April 2011 when it peaked at 14.36 percent.
The need for banking sector reforms was a focal point of the discussions between the Chief Adviser and the central bank Governor. The formation of the banking commission is seen as a crucial step towards addressing the sector's current challenges and ensuring long-term stability. —UNB
