Bangladesh Bank (BB) has allocated Tk 22,500 Cr to support weak banks through the issuance of newly printed banknotes, announced, Governor Dr. Ahsan H Mansur.
Speaking at a press conference at the central bank on Thursday (November 28), the governor emphasized that the funds would be withdrawn through bonds to maintain market stability.
“We have adopted a tight monetary policy,” said Dr. Mansur. “Money will be issued on one hand and withdrawn on the other, ensuring no instability in the market.”
The governor explained that the liquidity support was necessary to safeguard depositors and stabilize the banking system. He assured depositors that their funds were secure and urged them to withdraw money as needed, without panic. “I guarantee the safety of your deposits, regardless of the bank. However, no institution can sustain if all depositors withdraw their funds at once,” he cautioned.
Dr. Mansur clarified that this measure would not lead to an excessive money supply or inflation because of the simultaneous issuance of bonds. “The monetary policy remains tight. Customers will be able to withdraw their money from all branches of these six banks without difficulty. However, it is unrealistic to expect banks to handle mass withdrawals at the same time.”
Since taking office as the 13th governor on August 13, following the end of the Sheikh Hasina-led government, Dr. Mansur had initially stated that no weak bank would receive liquidity support through printed money. Instead, he proposed using inter-bank mechanisms with the central bank acting as a guarantor. However, addressing the ongoing liquidity crisis, which requires an estimated Tk 2 lakh crore, has necessitated adjustments to the strategy.
The governor concluded by reiterating that the central bank’s actions are aimed at stabilizing the banking sector while preventing inflationary pressures.
RSU
