‘That Economist Actually Lives On Talk’
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Photo: barta24.com
The Executive Director and Spokesperson of the Central Bank referred to the allegation that Bangladesh Bank is printing money to meet the liquidity crisis of the five specialized banks of the country even though it has stopped giving loans to the government. What has actually happened is our policy initiative, said Md. Mezbaul Haque.
He claimed that some so-called economists are running this baseless propaganda because of their tendency to speak 'indiscriminately' about everything. In order to maintain the positive momentum of the country's economy and not create a crisis of confidence of the common people, this senior official of the central bank expects a more responsible role of the people related to the economy and the media. Mezbaul Haque said these things in an exclusive interview given to the country's top multimedia news portal Barta24.com.
Barta24.com: Bangladesh Bank has stopped giving loans to the government by printing money, but there are allegations that it is printing money to five specialized banks of the country. What is the real story?
Mezbaul Haque: Here we need to know how we ensure the liquidity of the bank. We say keep a cash reserve ratio or CRR of four percent. Suppose a bank deposits Taka 100, then it has to keep 4 percent CRR and 13% SLR in non-cash form, total 17%. Why keep? Because, the person who kept this 100 taka may need the money. He may need 50 taka, what about this 17 taka? Why did I talk about this 17 taka, usually 17 taka is our standard practice. What if a recipient needs 30 taka? Maybe you can add 2 more to the bank and pay 20 taka what will happen to the rest? Then the concerned bank will come to us (Bangladesh Bank) to take the remaining 10 taka. Do I return him?
Barta24.com: Bangladesh Bank is the parent institution...
Mezbaul Haque: If I give him back, my economy will not work. Then all the banks have to sit with all the money, nobody can be given a loan. In that place, the Central Bank has this assurance that is to support a bank in case of crisis. That is the job of the central bank.
Barta24.com: This is a very normal process...
Mezbaul Haque: Absolutely normal. Suppose, yesterday the bank took 10 rupees, gave 30 rupees to the customer, the next day it may be that the bank received a deposit of 50 rupees. It will not give a loan on the same day. It will take time to process the loan. Then that bank is keeping a deposit of 50 taka, paid off that 10 taka and kept the remaining 40 taka - this is how liquidity management is right... this is the banking system (metaphorically I highlighted the matter with a calculation of 100). How many banks will be in this situation? Suppose there will be 3 banks. The rest will be fine. The next day may be 5 banks. Again, maybe a bank has made a mistake in liquidity management, pressure will be created for it, or people's trust in a bank has decreased. Then the customers of that bank will want to withdraw more deposits. All these are a part of the system, nothing new.
Barta24.com: What is the issue of printing money?
Mezbaul Haque: Take a bank, I paid 10 taka yesterday, the next day the bank returned 10 taka; So the previous meaning has been torn? That means for short term management in the system money will be created for a day or two, this is part of the system. When I say money printing, when I see that the bank has taken 10 taka, does not pay for 2 years. So this 10 taka additional injection has been done, which will be paid tomorrow, is the money printed? Temporarily gone for today, will be paid again tomorrow... So what is the meaning of printing money?
Barta24.com: What is the basis of 'printing money' propaganda?
Mezbaul Haque: It has no basis. It is some so-called economists who know this system up and down that if the central bank gives money, the money supply increases, if not, it does not. Maybe he doesn't know that I am giving money every day and withdrawing money every day. He thinks that the Central Bank is flooding that bank with money...
Barta24.com: So if it is true - then being an economist who is making such a statement, what message is it sending to the common man...
Mezbaul Haque: Who will do this challenge? In fact, the economist (who recently spoke about it in the media) wants to talk about it when he sees the media cameras. Whether he is relevant or not, should not be said, should not be said - he is not making any choice. That means he actually lives to talk. There are many good economists who don't comment on things that are not relevant. Because he knows, no matter what, one day can be considered as a phenomenon. The Central Bank has some day to day management, we will do it. This is the traditional rule of the Central Bank.
