Bangladesh Bank Independence and Governance: Lessons from Reserve Bank of Australia

Abstract

Bangladesh Bank Independence and Governance:
Lessons from Reserve Bank of Australia
Md. Asif Nawaz*
Aftab Uddin Mahmud Chowdhury**
Abstract: The paper examines the independence and governance of Bangladesh
Bank in time of setting monetary policy, introducing & using monetary instruments,
making deficit financing to the government, and performing any other functional
activities that prescribe by law. For a sustainable growth and macroeconomic
stability proper independence and governance of central bank is equally important
like other factors. This study is based on CBIG model that is used to measure the
degree of central bank independence and governance. In this work it is found that
Bangladesh Bank (BB) as the central bank of Bangladesh has a very little
independence and there is great deal of influence of the government over its
activities. After recognizing several aspects of Bangladesh Bank (BB) independence
and governance it is observed that BB’s overall CBIG index is quite low compare to
the Reserve Bank of Australia (RBA). More specifically, BB has the opportunity to
enhance its overall CBIG index by improving the independence in legal, price
stability objective, exchange rate policy, monetary policy & deficit financing and
accountability & transparency aspect.