Bangladesh Bank oblivious to coronavirus

At a time when central banks around the world are taking a whole host of precautionary measures and the world economy as well as all individual economies are under significant duress due to the coronavirus pandemic, it's astounding that our central bank is yet to even consider what actions it could take should the situation worsen. According to the United Nations Conference on Trade and Development, the global economy is set to lose USD 2 trillion due to the outbreak. Bangladesh, like all other countries, is also in the firing line and its economy will surely experience significant losses. Why then is its central bank so relaxed?   

The US Federal Reserve already slashed its interest rate to essentially zero on March 15 and launched a massive USD 700 billion quantitative easing programme to shelter the economy from the effects of the virus. And in the UK, the Bank of England had earlier slashed the rates by 50 basis points, and on Tuesday, the British Chancellor unveiled a 350 billion pounds lifeline for the economy. Meanwhile, what has our central bank done? Nothing!

There is no logic to explain why the central bank has dosed off like this. It is not like Bangladesh's economy is not at any risk from both external and internal factors. In fact, Bangladesh already has a weak banking sector riddled with huge amounts of non-performing loans. This means that any major external shock such as the current outbreak and the resulting bleak global economic outlook could send the sector spiralling into a liquidity crisis, especially in the absence of any policy support from the central bank.

The fact that this is not obvious enough for the central bank to have already formulated a strategy is shocking. How the authorities failed to see that it needs to have a policy in place, at the very least to instil people's confidence in the economy, is beyond us.

We call on the authorities to immediately begin working on different contingency plans to ensure that the central bank can support banks and businesses that might suffer losses due to the global pandemic. And we would also advise the bank to consult with experts and different stakeholders so that any emergency plans that it does formulate can withstand the various challenges that may arise in these uncertain and unpredictable times.