Bangladesh Bank (BB) has finally backtracked from its previous decision to not print more money, as Governor Dr Ahsan H Mansur on Thursday said that Tk22,500 crore has been printed to bail out six weak banks.
The six banks in question are First Security Islami Bank PLC (FSIBPLC), Social Islami Bank LTD (SIBL), Exim, National, Union and Global Islami.
In order to control inflation induced by new money in the market, the central bank also plans on issuing new bonds to withdraw that money later from the market.
The governor was speaking at a press conference at the central bank headquarters in the capital.
Ahsan H Mansur also said: “We backtracked from our previous decision of not printing money. We injected money into weak banks by printing money for the short term.”
“We will withdraw this money from the market by issuing bonds. We will proceed with our tight monetary policy, giving money in one hand and taking it in the other. The flow of money into the market will not increase, nor will inflation rise. This will not create unrest in the market either,” he also observed.
In this way, the net reserve money will not increase, he stated.
“The banking regulator is now helping weak banks with liquidity support so that the depositors can get their money back,” the governor said.
Regarding moving away from his previous decision, Mansur said: “I have to protect both depositors and inflation. I said I won't print money. But doesn't the position of people change?”
“We are providing liquidity support to weak banks. This is being provided to protect depositors. Tk22,500 crore has already been provided. We have come out of the instability in the branches. From Sunday, customers will receive cash as per demands at any branches,” he explains.
Depositors' money safe
“Depositors' money is safe; you can rest assured. No matter which bank you keep your money in, it will be safe; there will be no problem. However, if everyone starts withdrawing money all at once, no bank will survive. Withdraw as much money as you need.”
“The monetary policy will remain tight as before. We will not destabilize the market.nI will also say that no one should withdraw like Tk100 crore at once,” the governor further stated.
Asked whether this emulated policies made by the previous government, the governor responded: “Money laundering has stopped. Every bank is being monitored. Money is no longer being stolen from banks. Earlier, even after assisting by printing money, money would be laundered. But now accountability is being ensured. Every bank is being monitored. The boards have been changed.”
After the fall of the Sheikh Hasina-led government, on August 13 Ahsan H Mansur was appointed as the 13th governor of Bangladesh Bank.
Immediately after assuming office, he announced that no more liquidity support would be provided to weak and troubled banks by printing new money.
He also announced that liquidity support would be provided to troubled banks through interbank transactions or money markets and the central bank would act as a guarantor.