This article is brought to you by www.bdresearch.org BANGLADESH BANK FULL AUT N !

" # T AN E%ALUAT& N
!o'owar Hossai'(
Ka)rul Are*i'( (

EA$L"

$T

LATE #

,.- &NT$ DU+T& N

ABST$A+T Central bank autonomy is a debatable issue especially in the developing country like Bangladesh. Since its introduction Bangladesh Bank- the central bank of the country is working under the tight supervision and control of the Ministry of Finance. t is very common that while a central bank work under the control of such political parties it cannot work properly. Because mission! ob"ectives and interest of these political parties can not be same as the interest of the central bank. #herefore government always tries to influence over the monetary policy of bank to gain only short-run political benefits. $hereas in the ape% of the financial system! central bank should en"oy full autonomy to play roles for gaining long-term economic development through formulating and implementing appropriate monetary policy and supervising the financial institutions. Further it also may need to supervise the financial agenda of the party in power and accordingly advice the government too. #hough recently &ational 'arliament of Bangladesh has sanctioned some autonomy to the Bank! however government still have control over the Bank for the determination of interest rate! government borrowing! appointment of governor and the bank officials! right of issuing banks own instruments etc. Conse(uently Bangladesh Bank is en"oying only a partial or limited autonomy. #herefore adding all these factors this paper is an attempt to e%plore the ne%us between ) $hat degree of autonomy Bangladesh Bank is en"oining now and what should be.

#he central bank is the supreme monetary and banking authority that creates and maintains e(uilibrium in the monetary sphere. Bangladesh Bank! as a central bank of the 'eoples *epublic of Bangladesh! was established under the Bangladesh Bank +rder! ,-./ with the mission to manage the monetary and credit system of the country towards fostering growth and development in the best national interest. #he bank was established under the supervision of the Ministry of Finance. #herefore like many other developing countries Bangladesh Bank never en"oys 0full autonomy but still under the greater control and supervision of the government. #heoretically 0central bank full autonomy means 0full authority or power of the bank to independently setup monetary policy! freely introduce and use monetary instruments in the economy! freedom to provide or refuse deficit financing! appoint and remove bank governor and 1 or deputy governors with no or very limited influences of the government! perform any other functional activities that prescribed by the law! and fully accountable to the parliament. #hus central bank full autonomy is a debatable issue. 2owever in the country issue of 0Bangladesh Bank full autonomy is in discussion since some past years. Some e%perts have discussed the benefit of full autonomy by supporting the issue! where others are contrasting the issue by showing its demerits. +n the other hand! nternational Monetary Fund 3 MF4! $orld Bank and other donors are giving pressure for the full autonomy of Bangladesh Bank. #he main
Sales 6nalyst! #ranscom 7lectronics 8imited! 9haka! Bangladesh.

5 5 6ssociate 'rofessor! 9epartment of Business 6dministration! :ahangirnagar ;niversity!

9haka! Bangladesh.

:ournal of Business *esearch! <ol. .! :une /==>

purposes for which central bank autonomy is advocated are maintenance of price stability! proper control of financial institutions! independent power to use monetary instruments and therefore long-term economic growth. For sustainable long-term economic growth and development! the price stability! use of monetary control mechanism and monetary instruments etc. #herefore government has recently given some power to the Bank however that is not enough for a bank to operate independently. #hus still government tries to use the bank to meet their political commitments. 6s the central bank is a bank which constitutes the ape% of the monetary and banking structure 39eCock! ,->?4 hence it should have more autonomy. #herefore this paper will firstly identify the meaning of central bank full autonomy@ Secondly! e%plain the importance of full autonomy in the developing country@ thirdly! identify the nature of central bank autonomy around the world@ forthly! analyAe the present degree of Bangladesh Bank autonomy@ and finally synthesiAe the findings and offer recommendations for further effective operation of the Bangladesh Bank. ..- $ESEA$+H !ETH D L G" #his study was conducted mainly to e%plore two (uestionsB what degree of autonomy Bangladesh Bank is en"oining now and what additional autonomy it should have for its independent operations. #his is an e%ploratory research. #herefore research method followed for the purposes of the study was desk research and! reviews the e%isting literature on the sub"ect. #hus the secondary data have been collected from the publication of published te%ts! relevant "ournals etc. Further to make the study more broad-based and informative this research conducted informal interviews with four e%perts in the area. #hese e%perts are one present Ceneral Managers! one former Covernor and one former 9eputy Covernor of Bangladesh Bank and one former Ceneral Manager of a &ationaliAed Commercial Bank. #hough due to some authoritative constraints this research fail to e%plore the access of all re(uired information from every e%perts however! materials of the paper were presented systematically for analytical purposes and also draw inference there from. /.- +ENT$AL BANK FULL AUT N !" n developing countries Central Bank is a sub"ect to a great degree of fiscal and political influence. Close relation to the government either by personal ties or dependence on governments favor! poor establishment! problem of currency substitution and uneducated and unskilled manpower are the reasons of this influence 3Dashem! /==/4. Central bank autonomy is a debatable but crucial issue. 2owever to achieve the ob"ectives of the bank such as price and economic stability! better financial management etc it is very much necessary for the central bank to be free from all the influences. #hus the bank should be fully autonomous in all its functional and decisional activities. n defining central bank autonomy 6hmed 3,--.4 noted some attributes of a fully autonomous central bank. #hese attributes areB whether central bank can refuse credit to the government@ whether it can meet its e%penses without depending on government@ whether its governor or board of directors can function independently@ whether its governor is independent in following monetary policy@ whether it is free to choose its monetary instruments@ and finally whether it is free to regulate the banking policy or not. 2owever if the autonomy is such where government or other party influences over any of these attributes then it is called partial or limited autonomy. Further! among these attributes! the most important indicator of central bank full autonomy is 0power of the bank to refuse or provide credit to the government. 6n autonomous central bank can make monetary policy decision that is free from political pressure. Such autonomy can be only achieved by giving supreme power along various dimensions such as budgeting! policymaking! and the tenure of the governor or chief e%ecutive officer 32asan and 2annan! ,--.4.

Central bank plays a vital role in the economic development by formulating and implementing policy. n 8ate developed country there is a Bangladesh Bank Full monetary 6utonomy ) #oo 7arly or #oo E traditional concept of ob"ectives of central bank full autonomy aim at n developing countries! the main achieving three types of independenceB 'olitical! Macroeconomic and Financial a central bank confining its role to the traditional function. n such independence. 'olitical independence emphasis on single ob"ective like price stability! economies the independent board of directors who will be appointed for long terms! separate from others! accountability the central its banks actionto to the parliament and legislature central bank of confine role the standard duties such as and mechanism for complete resolution. Macroeconomic independence indicates the e%change rate stability! formulation of monetary and e%change rate policies without any interference. Financial independence focuses on transparency of accounts! prudential norms as relationship e%ternal li(uidity maintenance and care of a balanced prohibition of (uasi-fiscal subsidies such as preferential interest rate! e%change rate between credit of the distribution of non-cash profits and linkage of losses guarantees! restriction and net worth government budget 3Dashem! /==/4. 32asan #hus the autonomy be demands toand credit availability and must 2annan! ,--.4. both ) administrative and operational. 2owever this autonomy does not ignore the 2owever in the relation with the government. #here should have a co-operative relation between the independent central bank and the government. Fully autonomous central bank should developing country for their political commitment most of the set its ob"ectives with the government. 2owever this cooperation should be for time development the partyof in power further the economic activities but never for the fulfillment of any political interest of the party in power. t has been seen that in through the developing tries to achieve short-term development controlling over countries including Bangladesh - Covernment! $orld Bank and nternational centralFund banks Monetary 3 MF4 e%ercise their power on central bank in different ways. Covernment wants to influence or control the central bank for the achievement of its monetary and credit policies. Further financial institutions in these political commitment or decision. $orld Bank and MF as a loan provider play role in 0.&!1 $TAN+E F FULL AUT N !" &N THE DE%EL 1&NG + UNT$" countries are often the formulation and implementation of central banks policy too. weekly established or too closely related to the government by either personal ties or dependence on government favor 3Collyns ,-FE4. #hese countries also have the problems of currency substitution! uneducated and unskilled manpower etc. n this immature financial system private and foreign financial institutions try to dominate over national and international transactions and want to avoid or influence over the central bank policies. Further central bank in developing countries is often susceptible to political persuasion. ;nder these circumstances it is very difficult and often impossible to perform the true functions of a central bank and manage inflation through an effective monetary policy. 2asan and 2annan 3,--.4 identified that central bank autonomy and inflation are negatively correlated. n ,-FE Barro and Cordon construct a theoretical framework 3Figure-,4 and predict that monetary policy produces higher than desirable inflation level when run by government. Barro and Cordon 3,-FE4 argued that the outcome could be prevented in one of two ways. #he policy makers can make a commitment not to

:ournal of Business *esearch! <ol. .! :une /==>

Monetary policy affects general price level

n une%pected decline the price level temporally reduces economic activity

;ne%pected increase in the price level temporally e%pand economic activity

<oters value e%pectations of output but dislike inflation

But voters know that and therefore e%pect inflation Since the inflation is e%pected! it has no output benefit but is still associated

Covt. has a motive to increase inflation so as to stimulate

2ence the policy maker must supply inflation to prevent a temporarily s(ueeAe on output

Source2 Kashe)3 !.A. 4.--.5. Should +e'tral Ba'6 &' De7elo8i'g +ou'tries Be &'de8e'de't9. :our'al o* the &'stitutes o* Ba'6ers3 %ol. 0;3 11 <<.

#herefore! independent central bank can secure the interest of the country and achieve the economic development perfectly through formulating and implementing monetary and fiscal policy independently. 2owever such a wide range of functional responsibility may only be able to manage when the bank perform within highly integrated economics with matured financial system and educated and well-informed populations 3#odaro! ,--G in Dashem! /==/4. #hus the central bank in developing countries must be led by the ob"ectives given by the needs to bring about changes in the economic structure of the country for obtaining a better economic stability. =.- +ENT$AL BANK AUT N !" A$ UND THE > $LD Central bank all over the world en"oys various degree of autonomy. n some countries the central bank has more power to both administrative and operational autonomy. 2owever some countrys central banks power are fully restricted to formulate or implement the monetary and fiscal policy or to perform other functions that a central bank generally conduct. Beside this two e%treme position some central banks en"oy partial or mi%ed type of autonomy. =., +e'tral Ba'6 i' Ger)a'y #he Bundesbank is the central bank of Cermany. 8aw to the task of safeguarding the currency commits this bank. n perusing this ob"ective! it is often regarded as the central bank with a relative ma%imum autonomy. n its policy the bank en"oys institutional autonomy therefore guided by the mandate given to it under the law. #he bank has the statutory responsibility to determine monetary policy. 2owever it has the obligation to support the general economic policy of the government thus it do not have the functional autonomy. #he Federal Covernment has the right to decide on the e%change rate regime and to determine the parities! or central rates for the deutschemark! in a system of fi%ed e%change rate. Further with regard to the

Bangladesh Bank Full 6utonomy ) #oo 7arly or #oo 8ate aspect of appointment and dismissal of management and directors! the members of the central bank council are appointed upon nomination by the Federal and State Covernments 3#ietmeyer! ,--,4. =.. +e'tral Ba'6 i' Austria #he general provision of the &ational Bank 6ct of ,-F? stipulates that the 6ustrian &ational Bank! Central bank! is a "oin stock company that has the function of regulating the circulation of money in 6ustria and of attending to the settlement of payments with foreign countries. #he bank is free to participate as an organiAation and financially in international institutions that are concerned with cooperation between central banks or which otherwise aim and promote international cooperation in the field of monetary and credit policy. n determining the general lines of monetary and policy to be followed by the 6ustrian &ational Bank is this field for the purpose of performing the functions incumbent upon it! due regard shall be paid to the economic policy of the Federal Covernment 3Schaumayer! ,--,4. #he Coverning board with outlining the general directives of monetary and credit policy safeguards the autonomy of the bank. f the Covernments supervision or if there is an infringement of any of the prohibitions for the Federal *epublic lender and local authorities! the Coverning board as a whole or any member may appeal to an 6rbitration tribunal! which has to give final decision within three days. n governing body there are one governor appointed by president of the Federal *epublic! two-deputy governor appointed by Federal Covernments and eleven other members. 6mong the eleven members the banks general meeting elects si% members and the federal government appoints other five. 2owever there is no civil servant or members of the government or legislative bodies. #he governor is independent! but accountable! not to the parliament! not to the Covernment! but to the general public who also! according to the 6ustrian Constitution! elect the president of the Federal *epublic 3Schaumayer! ,--,4. 2ence these provisions are the safeguard for the 6ustrian Central Banks autonomy. =./ +e'tral Ba'6 i' New ?eala'd 'rice stability is the single ob"ective of monetary policy 3Dnight! ,--,4. #herefore procedure for determining monetary policy and Central Banks 3*eserve Bank of &ew Healand4 relationship with the government had been drastically changed in ,-F?. &ow the government may direct the bank to peruse an economic ob"ective for monetary policy other than price stability. #herefore before appointing any person as governor for five years! the finance minister fi%es an agreement of policy targets for the bank during that persons term of office. #he board of directors roles is to monitor the governors performance. #hey have also power to recommend the governors dismissal but do not participate in policy formation. #he bank is also bound to make a five years funding agreement with the ministry of finance. =.0 E@a)8les o* So)e ther +ou'try n some other developed and developing country the situation is also similar. n respect of the power to refuse to grant credit to Covernment and control of monetary policy! the Swiss &ational Bank is in one e%treme and constitutionally autonomous of political authorities. Senate appoints the members of the directors on the recommendation of bank council for si% years. 2owever the Bank and the Covernment are obliged to consult to each other before implementing 'olicy.

>

:ournal of Business *esearch! <ol. .! :une /==>

6t the other end! in the ;nited Dingdom! the #reasury has the power to issue formal but unpublished directives to the Bank of 7ngland. n fact the #reasury is in control of monetary policy at the officials level and the Bank of 7ngland is the agent that implements monetary policy in consultation with #reasury. 2ere the head of state makes the appointment of all directors on the recommendation of the cabinet. #he governor and deputy governor have five years term and four years for director. Between these two e%tremes the ;S Federal *eserve System is e%plicitly autonomous of the e%ecutive branch in determining monetary policy but report twice a year to Congress. Congress retains the right to instruct. 2owever in ;nited States the board members are appointed by the countrys president sub"ect to senate approval for ten and fourteen years respectively. A.- BANGLADESH BANK AUT N !" Bangladesh Bank was established under the supervision of the Ministry of Finance after independence of Bangladesh with the Bangladesh Bank +rder! ,-./ to control the monetary and credit system of Bangladesh. #he key ob"ectives of the bank was to stabiliAing domestic monetary value and maintaining a competitive e%ternal per value of Bangladesh taka towards fostering growth and development of the countrys productive resources in the best national interest. #he banks functions as mentioned in the Bangladesh Bank +rder ,-./ and the Bangladesh Bank 36mendment4 6ct /==E areB to formulate and implement monetary policy and to formulate and implement intervention policies in the foreign e%change markets@ give advice to the government on the interaction of monetary policy with fiscal and e%change rate policy@ hold and manage the official foreign reserve of Bangladesh to promote! regulate and ensure a secure and efficient payment system! including the issue of bank notes. Bangladesh Bank also regulates and supervises other banking companies and financial institutions in the country. 2owever recently there are lots of debates on 0the full autonomy of Bangladesh Bank. #his autonomy mainly means both the administrative and operational autonomy. A., Ad)i'istrati7e Auto'o)y n case of administrative autonomy Bangladesh Bank does not en"oy full autonomy. #o function independently a central bank needs independent board of directors or management who will act independently with greater power to establish and maintain monetary policy for the economic development of the country! not for the interest of the party in power. 6ccording to the 6rticle -3E4 of the Bangladesh Bank +rder! ,-./ 36mendment /==E4 the board will consist of a Covernor! a 9eputy Covernor! and seven 9irectors. 6mong these seven directors three will be government officials and nominated by the government of the *epublic. #he other four members are not government officials however nominated by the government. #he Covernor! as the chief e%ecutive officer of Bangladesh Bank! shall be appointed for four years by the government on such terms and conditions the government may determine. #he Covernor can be removed if party in power thinks in any reason that the Covernor is incapable to perform his duties. #hus the appointment and also the removal of the bank Covernor solely depend on interest and mode of party in power i.e.! the government. #he general trend of the countrys government is always to nominate a person as Covernor who! they think! can perform the best of their 3government4 interest. 2ence to be in his chair! the governor always would try to keep his office safe by showing either direct or indirect accountability to the government. +ne former governor of Bangladesh Bank e%pressed his view in this regard as!

Bangladesh Bank Full 6utonomy ) #oo 7arly or #oo 8ate IBangladesh Bank is not an statutory organiAation but need to be such where government will not be able to remove governor or deputy governor before the end of the termJ. n the history of Bangladesh no governor was able to continue his office for full period e%cept one. Moreover! government will be succeeding to influence the other members of the board for the same reasons. #his practice! therefore! imposes constraints on the true autonomy of Bangladesh Bank. A.. Fu'ctio'al Auto'o)y n case of functional or operational autonomy! Bangladesh Bank also has a limited power in practice such as the bank en"oys limited freedom to pursue policy leading to price stability. #raditionally Bangladesh government formulates the fiscal policy and the central bank formulates the monetary policy. n the formulation of the fiscal policy sometime central bank help the government only through providing some suggestions. 2owever Bangladesh Bank depends more on the government for formulating and implementing monetary policy. #hus a senior policy maker of the Bank think that the Bank is not even free to set up a sound monetary policy for the country. +ther policy makers emphasiAed that even Bangladesh Bank changes its monetary policy based on the governments guideline or interests. n addition! some bankers stated that central bank should have autonomous power to set up monetary policy with good coordination as practiced in developed countries. For this purpose a coordination council is suggested in the Bangladesh Bank +rder 36mendment4! /==E. 2owever the structure of the coordination council for the coordination of fiscal! monetary and e%change rate policy makes the autonomy limited. n the coordination council! among si% members only the governor represents the Bank. Five other members are officials from the Minister of Finance and government. #hough theoretically it is a good step but practically it does not ensure grater autonomy of the central bank. Because through these members the party in power can practice greater control over monetary! fiscal and other policy of the Bank. f the governor considers any policy as contradictory to the countrys economic welfare and supportive to the political benefit! he would not be able to pursue to alter or modify the policy as other group is in strong position may be with different views. 2ence these reduces the autonomy of Bangladesh Bank. 2owever the Bank has own the full autonomy in respect of foreign e%change policy. #he Bank is fully practicing its power to set up for an e%change policy. n respect of monetary instruments Bangladesh Bank en"oys partial autonomy. Bangladesh Bank has liberaliAed the interest rate policy but Ministry of Finance tries to influence or advice Bangladesh Bank to change interest rate. Cash reserve ratio 3C**4 and statutory li(uidity ratio 3S8*4 are the two instruments on which Bangladesh Bank has full control. &ow Bangladesh Bank does not need to seek permission from Ministry of Finance regarding C** and S8*. #herefore! Bangladesh Bank is setting C** and S8* independently though governor makes an informal discussion with Ministry of Finance. Bangladesh Bank performs open market operations. t buys and sells instruments like repos and reverse-repos. 6 fully autonomous central bank may have its own instrument other than #reasury bills. n many developed countries central bank has its own instruments and traded in the open market. Some years ago! Bangladesh Bank tried to issue its own bill in the market. 6nd it was widely accepted by the market. 2owever government did not encourage the bill. 6n economist e%pressed his opinions! Igovernment did not like the bill because it was successful and government

:ournal of Business *esearch! <ol. .! :une /==>

was in fear that government #-bill will lose the market.J #his kind of attitude further weakens the freedom of the Bank. #he bank also does not have autonomy in the +pen Mouth +peration. n the country it is very difficult for the central bank to use its power for refusing the government to finance budget deficit. +ne of the former governor of the bank identified this issue as one of the most important limitations of the Bangladesh Bank. Because even in a harmful economic situation none of the banks governor was able to refuse credit to the government. Moreover! government tries to control the administrative e%penditure of the Bangladesh Bank by issuing directives or instructions in order to ensure the 0role of the government. 2ence the operational freedom of Bangladesh Bank is considerably curbed. 6lso a former banker who has vast e%periences with nationaliAed commercial bank e%plained that Ithough since the induction the central bank has been playing a pivotal role in conducting monetary and credit policy to promote sustainable growth in the economy and however it does not en"oy full autonomy in respect of monetary policy which is influenced by the interventions of the government.J

2owever due to the pressure of the different pressure groups ) who wants to see more autonomous central bank ) day by day government is trying to give more autonomy to the bank. #hus as per the Bangladesh Bank 6mendment +rder /==E! already partial autonomy has been given to the Bank 3Financial 7%press! ,=th March! /==E4. 6s per this amendment now the Bank will be accountable to the &ational 'arliament instead of the e%ecutive branch. $hile a monetary and fiscal policy coordination council will ensure reflection and ad"ustment of the governments macro economic structure in the Bank policies. #he bill sought to ensure the Bangladesh Banks governors accountability to the 'arliamentary Standing Committee on Ministry of Finance! which can ask any (uestions! call for any documents on the monetary policy and the activities of the Bank. 6ccording to the amendment! the governor! at least once a year or at any other instance! if so summoned! will appear before the parliamentary committee to answer (uestions and report on the monetary policy and other activities of the Bank. *egarding this amendment countrys Finance Minister stated thatB
I#he autonomy of Bangladesh Bank has been suggested to keep consistency with the international banking system and following the e%amples of different countries.J 3Financial 7%press! ,=t h March /==E4 KK. I n no countrys central bank can en"oy complete independence and in Bangladesh our economy has yet to be self-reliant that the central bank can be given full freedom.J 3#he 9aily Star! ,=t h march! /==E4.

2owever about this amendments several opposition members of the parliament e%press their view as! the autonomy of the central bank depends actually on the governments attitude and not only on any law or amendments 3Financial 7%press! ,=th March! /==E4. Furthermore as the formulation of the 0parliamentary committee does not formulate in proper way therefore the member of this committee may not possess enough knowledge and e%perience in this field. #hus some of the e%perts in the areas of 0central bank autonomy fear that compare with the members of the Ministry of Finance the parliamentary committee may not act in a proper ways. <.- + N+LUS& N AND $E+ !!ENDAT& NS Bangladesh Bank is not a statutory organiAation. 2owever under the supervision of the Ministry of Finance it en"oys partial autonomy. #his autonomy is limited in both the areas i.e.! administrative and operational autonomy. #hough theoretically there is

:ournal of Business *esearch! <ol. .! :une /==>

Bangladesh Bank Full 6utonomy ) #oo 7arly or #oo 8ate

,= -

more power for the central bank in formulating and implementing monetary policy! in of opposition political parties n needs to beof changed. #hus the Bank administrators practice the power is limited. selection the members of the board and their needs to be free from all kinds of direct or indirect political 2owever dismissal the governments monopoly power is constrain onpressures. the autonomy of the real challenge that facing by thehistory Bangladesh how to evaluate Bangladesh bank. n the banks none Bank of theis governor ) e%ceptand oneimplement ) was able a consensus stability. #herefore in the practice institutional topopular continue his officeagainst for fulleconomic term as because the survival of governor is largely framework ofthe the0interest bank-government relationship is #hus likelywithin to be more important. ;ntil depend upon of the 0party in power. the e%isting structure this is achieved! itlarge may influence be little difference whether the parliament authority controls government have over the activities of the central bank. Such as by the bank or the power controls the influencing the party Bank in unwisely the party in Bangladesh power often Bank. takes credit and advances from the bank. Further due to the government persuasion the Bank also failed to issue its own bill in the market and take other decision for the better economic $EFE$EN+ES growth.
6hmed! 6. D. &. 3,--.4. Central Bank 6utonomy- $hy! $hat and 2owL Bank 'arikrama! <ol. #hough it has full power MM ! March. ,-,>. in some areas of decision-making however in most of the

cases the banks decision is influenced by the government. 2ence the Bank is Collyns! C. 3,-FE4. 6lternative to the Central Bank in the 9eveloping $orld. MF +ccasional en"oying very limited autonomy. 2owever a central bank needs to set up and Paper No. 20, Washington. implement such ob"ectives that can secure the countrys long run economic growth. 9e Cock! 2. 3,->?4.Bank Central Banking. Erd edition. Stapless 'ress 8imited! 8ondon. #hus for M. Bangladesh full autonomy and a healthy financial market the following 2asan! D.! and 2annan! Shah 6. 3,--.4. +n Monetary 'olicy and Central Bank ndependence. measures should be taken immediately by the financial planner of the nation. #hese are! Journal of International Affairs, Vol. 3, January-June. 19- 0.
Dashem! M. 6. 3/==/4. Should Central Bank in 9eveloping Countries bea ndependent of *estructuring the Bangladesh Bank as statutory organiAation. t needs strong CovernmentL base :ournal of 7lection the nstitute of Bankers! <ol. ?F! :an.! /==,-:une! .,-F.. constitutional like Commissions in Bangladesh! which can act

without political interference. Dnight! *. 8. any 3,--,4. Central Bank ndependence in &ew Healand. #he 7valuating *ole of !entral "an#, Pu$li%ation &er'i%e, !entral "an# (epart)ent I*+, Washington. (.!.1,0#he governor of the Bangladesh Bank will be responsible for every of his 1,-. responsibilities only to the parliament therefore the power of the appointment Schaumayer! M.! 3,--,4. Central Bank ndependence in 6ustria.Covernor #he 7valuating *ole Central and removal 3if necessary4 of the governor or 9eputy should be of given "an#, Pu$li%ation &er'i%e, !entral "an# (epart)ent I*+, Washington (. !. 1./-/ .
#ietmeyer! 2. 3,--,4. #he *ole of ndependent Central Bank in 7urope. #he 7valuating *ole of From the member Board of 9irectors and Coordination Council I*+, the number of !entral "an#, of Pu$li%ation &er'i%e, !entral "an# (epart)ent, Washington. 1/.--9. #he Bangladesh bank +rder! more than one-third of,-./. total members of the committee. More e%perts from #he Bangladesh Bank 36mendment4 6ct! /==E. outside of this two party can be included. Financial 7%press! ,=t h March! /==E4 Bangladesh Bank should ensure #he 9aily Star! ,=t h March! /==E its own earning to meets its own e%penses.

to the parliament.

government officials should be reduced. #he government officials should not be

Because more the bank will dependent on government for its own e%pense more the government will try to secure control over the operation of the bank. 2ence the bank needs to reduce its dependency from government and should try to meets e%penses from own source. full control over monetary policy the central bank also needs to be functionally independent. #herefore other government control on the Bank like +pen Mouth +peration should be reduced and or removed. if needed! e%perts from outside also should be included in the committee. officers are need to be recruited by the Bank.

+nly the institutional autonomy alone is not sufficient for a central bank. #o be

'arliamentary Standing Committee must be consisting of e%perts in this field and $ithout any e%ternal influences more (ualified and efficient management-staffCovernment and other political parties should act together and also co-operative

each other for the operational and administrative autonomy of the bank.

2owever it is not only the induction of new law or amendments of e%isting law that will ensure the sound operation of the central bank. For the operational and administrative success of the bank! not only the party in power but also the attitude