Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has expedited its operations to mop up excess fund from the market using different monetary instruments aiming to contain inflationary pressure on the economy, officials said.
The Bangladesh Bank (BB) slashed assured liquidity support (ALS) on Wednesday for both primary dealer (PD) and non-PD banks, bypassing its previous directive as part of the latest moves.
Under the existing provisions, the PD and non-PD banks are allowed to enjoy liquidity support against both success and devolved securities for a maximum of two and a half months at a stretch from the date of issuance of government-approved securities.
“The central bank has cut the ALS support slightly to withdraw excess liquidity from the market. But it has provided special repurchase agreement (repo) facility to both the PD and non-PD banks on the same day for complying with cash reserve requirement (CRR) of the central bank,” a BB senior official told BBN in Dhaka.
He also said the central bank is using various monetary instruments in line with its latest monetary policy statement (MPS) to contain inflationary pressure on the economy.
Besides, the central bank is going to cut the tenure of ALS by 15 days - from the existing 75 days to 60 days, another BB official said, adding that the central bank is using the monetary tools to decrease the amount of reserve money.
The BB is also mopping up surplus liquidity from the market through auction of 30-day Bangladesh Bank Bills from November.
“The central bank has planned to accept the auction of 30-day BB Bills every working day,” another central banker said, adding that the BB would issue a circular in this connection shortly.
BBN/SSR/AD-12Dec12-9:55 pm (BST)
