Washington DC (BBN) – Bangladesh Bank (BB) Governor Atiur Rahman has emphasized inclusive financing for achieving inclusive economic growth.
“In Bangladesh experience, we have found inclusive financing a good instrument of promoting both output stability and financial stability,” the central bank chief said speaking at an IMF seminar held in Jack Morton Auditorium of George Washington University, Washington, DC on April 13.
Dr. Rahman aso said inclusive financing does this by diversifying asset portfolios and deposit bases of financing institutions amongst myriad small new inclusion clients, reducing credit and liquidity risks and generating inclusive growth.
“This policy campaign has paid us well as reflected in terms of 6 plus percent growth with stable inequality of income index, stable exchange rate leading to trebling of foreign exchange reserves, falling inflation, reducing trade deficit, maintaining current account surplus and consistent improvement of social development indices in particular sharp reduction in poverty over the last half a decade or so,” he noted.
The BB governor talked about the benefits of unorthodox monetary policy in the ‘new normal’ at the seminar that was opened by IMF Managing Director Christine Lagarde and participated by panelists Professor John Taylor of Stanford University, Professor Takatoshi Ito of University of Tokyo, and Professor Charles Calomiris of Columbia University.
The BB governor also said that the emerging economies are always haunted by the destabilizing pressures of the spillovers of imbalances in macroeconomic policies of large advanced economies.
He advocated for reducing vulnerability of small open and emerging economies to destabilize external influences and said will need global macroeconomic balance sustained by effective global coordination, global liquidity growth appropriately tethered to global output growth.
He also noted that meaningful progress in this direction since the global financial crisis remains insignificant. “Price stability, the primary objective of monetary policy, does not occur in isolation and depends on stability in other parts of its environment.”
The central bank chief said financial stability is a crucially important requirement for price stability; monetary policies need therefore be somewhat unorthodox and mindful about helping uphold and bolster financial stability.
“Leaning against the wind or acting counter-cyclically may not be enough when wind of financial instability begins blowing strongly. It is better to keep on building up defenses in advance.”
BBN/SSR/AD-14Apr14-8:14 pm (BST)
