The key to legally meeting the country’s demand for gold could be the creation of a “gold exchange”, say gold traders. Since gold can be directly converted to currency, the government is unwilling to import it in bulk. Hence, a gold exchange would increase gold supply, decrease the price of gold and remove confusion over its source.
Member of the Executive Committee of Bangladesh Jewellers’ Association (Bajus) Dewan Aminul Islam said: “Government revenue will increase if a gold exchange, just like the Dhaka stock exchange, is created.”
The blueprint for the gold exchange provided by Aminul Islam states:
Gold traders will open an account in a commercial bank, which will be like opening a BO account in the share market.
A gold business monitoring authority should be created for monitoring the whole process. Alternately, it could be done by Bangladesh Bank.
Traders will keep a specific amount of money in the gold account.
From this account, traders will be either buy or sell gold.
The gold exchange will be in sync with the international market. Gold has to be bought and sold at the prices set by the International or London market at 6am in the morning, or at 6pm in the evening.
One or several banks will be acting as broker houses, where gold can be traded in kilos, grams or ounces.
According to the proposal made by Dewan Aminul Islam, Bangladesh Bank will supply the gold from its vault. Anyone who wants to buy the gold will buy it from the open market, and sell it in a similar manner.
A premium will be added to the trade, which will be used in regulating the gold market. The premium has to be set in such a manner that the market will remain open and business will go on at the same time.
Dewan Aminul further said: “The government does not have to provide any money for regulating the market. It only has to provide logistical support, as the gold traders will be providing the necessary capital.
“Bangladesh Bank will take money in advance from the gold traders,” said Dewan. “From that amount, gold will be supplied according to demand. If the market can be regulated in this manner, the gold industry will expand, and the government revenue will increase as well.”
Similar sentiments were echoed by General Secretary of Bajus Dilip Kumar Agarwal. He said: “Bangladesh Bank can either import gold, put a premium to it and then supply it to traders, or supply gold through government and private banks by opening a gold exchange.”
However, former representative of Bangladesh Bank Md Mahfuzur Rahman thinks that there is no need for creating a gold exchange in the Bangladeshi economy.
“We should not import gold in bulk, nor should we create a gold exchange,” said Mahfuzur. “Because, it is not Bangladesh Bank’s duty to monitor gold trade keeping banking activities aside.”
On the other hand, even though files are being exchanged for implementing a gold policy, it is yet to be effective. National Revenue Board (NBR) Chairman Mosharraf Hossain Bhuiyan sent a DO letter to Commerce Secretary Shubhashish Bose on January urging him to implement regulatory steps in the gold market.
During the 2017-18 budget proposal in the National Parliament, Finance Minister AMA Muhith declared that a “National Gold Policy” would be effective from last year’s December. But due to different problems at the executive level, such steps have been delayed. l
This article was first published on banglatribune.com