Economic experts believe the central bank should adapt immediate response measures to counteract virus fallout
With the looming uncertainty over coronavirus pandemic, banking experts have suggested that the central bank switch to quick response measures instead of charting fixed and long-term strategies.
They came up with the recommendation Thursday at a webinar titled "Central Banking in the New Normal" – which was jointly hosted by the Bangladesh Institute of Bank Management (BIBM) and Asia School of Business.
In his keynote paper on central bank's role in the local context, BIBM Professor Shah Md Ahsan Habib said that the economy, saddled with high remittance inflow and export earnings, is still enjoying a green patch.
"But uncertainty looms over the future as we do not know when and how the pandemic will be over. The central bank must be cautious in implementing the stimulus package so that the money does not end up in the wrong hands," he stated.
Prof Ahsan also pointed out the new opportunities coming up amid the pandemic and advised the central bank to respond quickly with policies to tap into newly emerged chances.
Regarding what central banks can do in the global context, Asia School of Business Professor Hans Genberg, in his keynote, said that central banks will have to provide more services with limited resources in the new normal.
He noted that monetary stability is no longer enough, and the focus should be on financial stability.
On central banks' role in the changed global order, Asia School of Business Prof Anella Munro said the banks need to adapt to a new digital platform that the world has entered during the pandemic.
As the chief guest at the event, former Bangladesh Bank governor Salehuddin Ahmed advocated for reaching out to the small and medium-sized enterprises (SMEs) with more aid.
Noting that central banks around the world are not entirely independent, he said the banks would have to fight the pandemic-triggered crisis in these new ground realities.
The former governor, however, believes that the Bangladesh Bank is still on the right track.
He underscored the central bank's coordination with other public offices and the importance of maintaining financial disciplines to implement policies and plans. The former governor emphasized service quality and decentralization of banking services rather than the approval of new banks.
Taking part in the discussion, central bank Executive Director Habibur Rahman said the central bank is taking appropriate steps to deal with the pandemic.
Another Executive Director of the Bangladesh Bank Leela Rashid said the central bank is focusing on digital financial services, as well as the SME sector, to tackle the virus crisis.