Bangladesh Bank Governor Abdur Rauf Talukdar said, 'There is talk of printing money from different stages. This is a misconception. Now the central bank is not giving any loan to the government. All of the government loans are provided by commercial banks. As a result, the net effect of printing money is now zero.
He said these things while speaking as the chief guest at an event organized at Sonargaon Hotel in the capital on Sunday (May 5).
Dhaka University's Department of Development Studies and Banik Barta jointly organized the first International conference on 'Adapting Development Approaches to Controversial Global Situations'. The Plenary-II session on the first day of the conference was on the coordination of monetary policy and fiscal policy.
Chaired by former governor of Bangladesh Bank Dr. Atiur Rahman panel discussant in the session were former BB governors Dr. Salehuddin Ahmed and Fazle Kabir, former finance secretary Dr. M Tarek and Mohammad Muslim Chowdhury.
Various issues such as strong central bank, interest rates, inflation, foreign exchange reserves, liquidity crisis came up in the discussion.
Dr. Salehuddin Ahmed said, "The central bank has enough power." No one gives freedom. To be achieved through manpower, skills. Again, there is external pressure; you have the ability to deal with it.
The former governor said that not everyone was an angel when he was the governor. There was pressure to approve new banks. However, he wasted time in various ways and went to the last stage and said that giving the bank will cause damage to the economy.
He said the time has come for the central bank to be tougher in the current reality of the financial sector. No country's central bank is beyond political influence. Here everyone wants to walk in easy way. Collection of direct taxes is easier than indirect taxes - that is what everyone is looking at. Here the rich and the poor have to pay the same rate of tax on a piece of bread.
Dr. Salehuddin said that it will not be enough to reduce the inflation only by tightening the monetary policy. If not for employment, investment, inflation control, then contractionary monetary policy will have the first impact on the investment of small and medium industries.
Mohammad Muslim Chowdhury, the former finance secretary and one-time auditor and controller, said contractionary monetary policy is being talked about. Again, the government has issued a bond of Tk. 20,000 crore against the subsidy on electricity. Again the banks can borrow money from the central bank by keeping this bond, they can save the SLR. As a result, if the money multiplier effect is taken 5 times, the effect of Tk. 20 thousand crore on the economy is Tk. 1 lakh crore. However, the good news is that now the central bank is lending to the government instead of lending to commercial banks.
He said, in various fields including interest rates, it is often said to be determined on the basis of demand and supply. But it is not good in all cases. Some players sometimes use this term for their own benefit.
Governor Abdur Rauf Talukder said the government has issued bonds against government subsidies for electricity and fertilizers. If this bond was not issued, two types of crisis would have been created. First, those who received money from the government were defaulting even if there was no problem. Another is that the banking sector is already in a liquidity crisis. If the bonds were not issued, the liquidity crisis would have worsened. Now the question is whether it has 'money creation'. It is not true that money creation has taken place with bond issue.
Speaker of the National Parliament Dr. Shirin Sharmin Chowdhury was the chief guest at the opening session of the two-day conference. Minister of State for Finance Waseka Ayesha Khan was the special guest.
Under the chairmanship of Dhaka University Vice-Chancellor Professor Dr. ASM Maksud Kamal, the panel discussant was the advisor of the former caretaker government Wahiduddin Mahmud who is a professor of various universities. Dhaka University Development Studies Department Chairman Professor Dr. Rashed Al Mahmoud Titumir hosted the event.