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Sunday, February 26, 2012

Proper conduct of monetary policy

Dr. Sadiq Ahmed, Vice-Chairman, Policy Research Institute writes on the monetary policy management 'why it is required for a tightened monetary stance by the central bank?'. A significant number of issues one can learn from this article on the ongoing efforts of the central bank.

However, I think, the lessons that Dr. Sadiq attempted to provide to the private sector seem too much to grasp. To me, the private sector has some valid reasons to be concerned about money liquidity process in the banking system as the government has been drastically taking out liquidity from the banking system. For your information, as our new 6th Five Year Plan reveals:
1. Private sector contribution has been estimated at Tk.10.4 trillion (77.2% of total Plan Investment). The question is whether the new monetary stance will ensure this. 
2. Ensuring adequate levels of domestic credit for the private sector over the Plan period, within the aggregate limits of the targeted broad money expansion will require containing credit to the government (net) and other public entities within reasonable limits (Page 88). The question is whether the new monetary stance believes this. 

As one of the member in the 6th Five Year Plan committee, I hope, Dr. Sadiq believes on what they set for the private sector in the Plan. 

Here is the link of the article.

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