Govt to form banking commission soon for financial sector reforms

The interim government is going to form a banking commission soon to bring about reforms -- a longstanding demand of economists aimed at salvaging the financial sector which has been suffering from high default loans and weak governance.

Besides, a paper on the overall situation of the financial sector and a roadmap for the reforms will be published in the first 100 days of the interim government, according to a statement from the chief adviser's office today.

The disclosure came after a meeting between Chief Adviser Prof Muhammad Yunus and Bangladesh Bank (BB) Governor Ahsan H Mansur. 

The meeting also agreed to maintain the contractionary monetary policy stance to bring down inflation, which hit 11.66 percent in July, the highest in 13 years.

To increase the flow of foreign exchange, a decision has been taken to increase the band of the crawling peg, which allows fluctuations of the exchange rate within a predefined range, to 2.5 percent from 1 percent.

The revision in the band of crawling peg comes more than three months after the BB introduced the crawling peg moving away from administered rates of US dollar in its bid to gradually allow demand and supply to determine the exchange rate.

The BB introduced a crawling peg mid-rate of Tk 117 in May this year by allowing an over 6.3 percent deprecation of the taka, which has significantly lost value in the last two and a half years amid falling foreign exchange reserves.