Contents

Vision and Mission.........................................................................................3

A Brief History...............................................................................................4
Branches......................................................................................................4
Functions of Central Bank in light of recent economic activities:...........................4
References...................................................................................................7
Central Bank of Bangladesh:
An Overview
Bangladesh Bank, the central bank as well as the principal authority for regulating
the state's monetary and financial system, was formed as a body corporate in
Dhaka on December16,1971, by the Bangladesh Bank Order, 1972 (P.O No. 127 of
1972). But what is the difference between a commercial bank and a central bank? A
central bank, like any other commercial bank, charges interest on loans made to
borrowers, principally the government of the country for which the bank functions,
and to other commercial banks, typically as a "lender of last resort." A central bank,
on the other hand, differs from a regular commercial bank in that it has the
monopoly on producing a nation's money, which is loaned to the government in the
form of legal tender. Its prime objective is to deliver the nation's money supply, but
it also has more active responsibilities such as managing subsidized-loan interest
rates and serving as a lender of last resort to the banking sector during times of
financial crisis (private banks often being integral to the national financial system).

Vision and Mission

Vision: The Bangladesh Bank (BB) aspires to operate as a modern, dynamic,
effective, and forward-thinking central bank to manage the country's monetary and
financial system with the goal of establishing the internal and external value of
Bangladesh Taka conducive to rapid growth and development of the economy.
Mission: To support the vision, the mission of the Bangladesh Bank is to manage
the country's monetary and credit system with the goal of establishing domestic
monetary value and maintaining a competitive external per value of the Bangladesh
Taka in order to foster growth and development of the country's productive
resources in the best national interest.

A Brief History
1972: The government chose to nationalize all banks in order to divert cash to the
public sector and to prioritize lending to sectors that wished to rebuild the war-torn
country, primarily industry and agriculture. However, these loans were made to the
public sector without regard for commercial concerns; banks had inadequate capital
leases, bad customer service, and lacked all market-based monetary instruments.

1982: The first reform program was launched, with the government denationalizing
two of the six nationalized commercial banks and allowing private local banks to
compete in the banking industry.

1986: A National Commission on Money, Banking, and Credit was established to

address the banking sector's problems, and a number of measures were
implemented, including setting recovery targets for nationalized commercial banks
and development financial institutions and prohibiting defaulters from receiving new
loans. However, the financial sector's efficiency could not be enhanced.

1990: Contracts with the World Bank resulted in the formation of the Financial
Sector Adjustment Credit (FSAC) and the Financial Sector Reform Program (FSRP).

Branches
Bangladesh Bank now has 10 offices in Bangladesh, located in Motijheel, Sadarghat,
Chittagong, Khulna, Bogra, Rajshahi, Sylhet, Barisal, Rangpur, and Mymensingh;
total personnel were 5807 (officials 3981, subordinate workers 1826) as of 31
March 2015.

Functions of Central Bank in light of recent economic activities:

Bangladesh Bank, like all other central banks, serves as both the government's
banker and the banker's bank, serving as a "lender of last resort." The Bangladesh
Bank, like the majority of other central banks, has a monopoly on the issuance of
money and banknotes. Except for the one-, two-, and five-taka notes and coins,
which are the responsibility of the Government of Bangladesh's Ministry of Finance.
The key functional areas are as follows:

1. Formulation and implementation of monetary and credit policies:

The key approaches for the Central Bank to manage the country's monetary
and credit system, which in turn supports growth and development of the
 country's productive resources, are to stabilize the domestic monetary value
and maintain a competitive external par value of the taka. The monetary
policy outlined for FY'22 focuses on maintaining an expansionary and
accommodative mode to support the economic recovery process while
exercising necessary cautions for the overall process and financial stability.
2. Reserve Management Strategy: to manage and store Bangladesh's
official foreign reserves
Bangladesh Bank keeps the country's foreign exchange reserves in various
currencies to mitigate the risk posed by extensive volatility in major currency
exchange rates and highly erratic movement in interest rates in the global
money market. This year's foreign exchange reserve of $46 billion, as
reported at the end of June 2021, was 15% inflated. In May 2021, the
Bangladesh Bank made a $200 million loan from its foreign exchange
reserves to debt-ridden Sri Lanka, departing from its internal treasury
investment guidelines because the borrowing country could not meet the
standard rating threshold for accepting such an investment.

3. To promote, regulate and ensure a secure and efficient payment

system, including the issue of bank notes, & Interest Rate Policy
The Bangladesh Bank has the sole authority to issue banknotes in
Bangladesh. The Bank of Bangladesh, like other central banks around the
world, changes the design of its banknotes from time to time. The Payment
Systems Department (PSD) issues licenses based on two common criteria, a
payment service provider (PSP) and a payment system operator (PSO). BB
introduced efficient branchless mobile financial services (MFS) in 2011 in
Bangladesh as the country gained widespread, experienced mobile phone
network, large number of users mobile phones and improved IT
infrastructure. According to the Bangladesh Bank, most banks give lower
interest rates on deposits than the inflation rate. The Bangladesh Bank has
now established a floor on deposit rates for the benefit of depositors, as they
are now receiving interest returns that are lower than the inflation rate,
eroding their purchasing power. According to the circular, banks have been
 advised to calculate the average inflation of the previous three months when
calculating a monthly interest rate on deposits of three months or more.

4. To give advice to the Government on the interaction of monetary

policy with fiscal and exchange rate policy, on the impact of various
policy measures on the economy and to propose legislative measures
it considers necessary or appropriate to attain its objectives and
perform its functions

5. To regulate and supervise banking companies and financial

institutions.
A secure and resilient financial industry requires robust legal, regulatory, and
supervisory frameworks for effective and efficient supervision, as well as a
strong infrastructure. It is critical to ensure a healthy financial sector by
avoiding financial risks and minimizing potential disruptions in the financial
intermediation process. Bangladesh Bank has undertaken several action
 plans to structure a risk focused supervision framework by incorporating
practice of good corporate governance, integrated risk assessment, coverage
and scope of deposit insurance scheme.
6. To formulate and implement intervention policies in the foreign
exchange market, prevention of money laundering, collection and
furnishing of credit information

References
1. https://en.wikipedia.org/wiki/Bangladesh_Bank
2. https://www.bb.org.bd/openpdf.php
3. https://www.tbsnews.net/economy/banking/deposit-rate-will-not-be-less-
inflation-bangladesh-bank-285322
4. https://www.tbsnews.net/economy/banking/central-bank-moves-mop-
excess-liquidity-banks-284143
5. https://www.tbsnews.net/economy/bangladesh-becomes-lender-first-time-
250924
6. https://www.tbsnews.net/economy/forex-reserves-overstated-72bn-imf-
319909
7. https://www.tbsnews.net/economy/bb-watchful-expansionary-policy-280921
8. https://www.tbsnews.net/economy/banking/bangladesh-bank-remain-highly-
vigilant-ensure-quality-and-purpose-loan-280735
9. https://www.bb.org.bd/fnansys/regulator.php
10. file:///C:/Users/YASIR%20ARAFAT/Downloads/mps_fy2021-22.pdf