Financial sector danger removed but full stability to take time: Cenbank
The good news is that financial losses have already been reduced and the critical risks in the financial sector have been addressed, BB spokesperson says
The Bangladesh Bank has clarified that the immediate risks to the country's financial sector have been resolved, but full economic stability is still a work in progress.
"The good news is that financial losses have already been reduced and the critical risks in the financial sector have been addressed," Husne Ara Shikha, executive director and spokesperson for the central bank, said during a discussion with journalists at her office today.
She, however, noted that the bank is not entirely satisfied with the progress so far.
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Over the last five months, from July to November 2024, Bangladesh Bank has implemented several measures to stabilise the economy.
These include restructuring of commercial banks, formation of a specialised banking task force, efforts to stabilise the foreign exchange market and inflation control strategies. "Some of these initiatives have already yielded results, but other outcomes will require more time to manifest," Shikha explained.
Discussing the issue of money laundering, Shikha revealed that approximately 400 accounts were seized by the Bangladesh Financial Intelligence Unit (BFIU) as of November 2024, following the recent political changeover.
"By the end of 2025, we expect to have a clear understanding of how much money has been laundered, through which banks, and to which countries," she said, adding that recovering the laundered funds would be a lengthy process.
She noted that agencies tasked with recovering the funds are working diligently but do not disclose details to the central bank for security reasons.
On inflation, Shikha highlighted that BB had increased the policy interest rate multiple times in an attempt to curb rising prices.
"We are hopeful that inflation will ease this January. However, if it remains unchecked, further hikes in the policy interest rate may be necessary," she warned.
When asked about the sluggish growth in private credit, Shikha clarified that credit expansion is not solely dependent on interest rates. "Infrastructure development, energy supply and port facilities all play a critical role in enabling private sector growth," she said.
While significant strides have been made in addressing financial vulnerabilities, Shikha cautioned that achieving full economic stability will take time. "We are committed to building a resilient and stable financial system, but patience is essential as the process unfolds," she added.
