“We conducted monetary policy, not through ‘helicopter-money’ but more through ‘ox-cart money’ that touches and transforms the ground,” said Dr. Atiur Rahman, former Governor of the Bangladesh Bank, in a seminar on ‘ Innovations in Monetary Policy” at the World Bank head office.
The fully-packed seminar was chaired by Chief Economist and Senior Vice-President, Dr. Kaushik Basu, and attended by high officials and experts of the Bank and Fund, including Executive Director Subhash Garg, Alternate Executive Director Musharraf Hossain Bhuyian, and Director Dr. Hassan Zaman.
Dr. Rahman shared his hands-on experiences as a long-serving governor of the Bangladesh’s central bank and talked how the institution got itself gradually transformed into a reputed developmental central bank with a wider participation of stakeholders without compromising its predominant role of controlling inflation.
He also passionately narrated the story of how a conventional central bank began to change and catalyze innovations and brought efficiency in the largely bank-based financial system and turned into an incubator for creative ideas within a short period of time. In fact, it started setting good examples of public sector innovation and institutional reform, providing demonstration effect for sustainable impact. It has also been playing a coordinating role with both private and public agencies.
As a perspective to this transformation, he pointed out four critical transitions which Bangladesh has been undergoing simultaneously. These are rapid urbanisation, young demographics, speedy technological adoption and industrialisation.
These transitions are synergistic and all need finance. Bangladesh Bank responded positively to this call and created adequate enabling environment for creation of entrepreneurs.
He also said Bangladesh experienced unprecedented reduction of poverty (over 50 percent points) and fastest growth of life expectancy (70 years) just in four decades.
Thanks to the drive of financial inclusion, the growth in inequality has also been minimal. Moreover, the participation of women in labor force and rapid growth of smaller economic units, mostly in rural areas, have enabled deep structural transformation in Bangladesh. The financial depth including massive inflow of remittances and activism of microfinance institutions have been conducive to this transformation.
Given this perspective, Bangladesh Bank focused on experimentation and implementation in conducting its monetary policy which ingrained socially and environmentally responsible financing ethos combing short-term management of business cycle fluctuation with long-term sustainable agenda.