Former governor of the central bank Dr Atiur Rahman has said Bangladesh is currently at the tipping point of a successful manufacturing take-off in a democracy and hence it needs to sail harder, reform faster and implement better.
The former Bangladesh Bank (BB) governor made the comment while addressing a seminar on 'Innovations in Monetary Policy' held at the World Bank (WB) Head Office in Washington DC Wednesday.
"We conducted monetary policy, not through 'helicopter-money' but more through 'ox-cart money' that touches and transforms the ground," Dr Rahman explained.
Chaired by Chief Economist and Senior Vice-President of WB Dr Kaushik Basu, the seminar was also attended by high officials and experts of the WB and the International Monetary Fund (IMF), including Executive Director SubhashGarg, Alternate Executive Director Musharraf Hossain Bhuyian, and Director Dr Hassan Zaman, according to a message received here from Washington Thursday.
Earlier on September 18, Mr Rahman left Dhaka for Washington DC at the invitation of Dr Basu to share his experience in innovative central banking with senior officials of the WB and the IMF.
At the seminar, Dr Rahman shared his hands-on experience as a long-serving governor of Bangladesh's central bank and talked how the institution got itself gradually transformed into a reputed developmental central bank with a wider participation of stakeholders without compromising its predominant role in controlling inflation.
He also passionately narrated the story of how a conventional central bank began to change and catalyse innovations and brought efficiency in the largely bank-based financial system and turned into an incubator for creative ideas within a short time.
"In fact, it started setting good examples of public sector innovation and institutional reform, providing demonstration effect for sustainable impact," the former governor observed.
It has also been playing a coordinating role with both private and public agencies, he added.
As a perspective to this transformation, he pointed out four critical transitions which Bangladesh has been undergoing simultaneously.
"These are rapid urbanisation, young demographics, speedy technological adoption and industrialisation. These transitions are synergistic and all need finance. Bangladesh Bank responded positively to this call and created adequate enabling environment for creation of entrepreneurs," he noted.
He also said Bangladesh experienced unprecedented reduction of poverty (50% points+) and fastest growth of life expectancy (70 years +) just in four decades. "Thanks to the drive of financial inclusion, the growth in inequality has also been minimal."
Moreover, the participation of women in labour force and rapid growth of smaller economic units, mostly in rural areas, have enabled deep structural transformation in Bangladesh, according to the former governor.
"The financial depth including massive inflow of remittances and activism of microfinance institutions have been conducive to this transformation," Dr Rahman explained.
Given this perspective, the BB focused on experimentation and implementation in conducting its monetary policy which ingrained socially and environmentally responsible financing ethos combing short-term management of business cycle fluctuation with long-term sustainable agenda, said Mr Rahman who teaches development studies at Dhaka University.
Simultaneously, the central bank focused on upgrading technology and market infrastructure, regulatory framework and selected refinancing initiatives.
"As a result, there was a substantial improvement in transmission channels and desired macroeconomic stability with very little volatility by reducing risks through financial inclusion, improved regulation and strategic supervision with a bias for productive and sustainable activities," he pointed out.
Dr Rahman claimed that all these led to desirable outcome of shared prosperity and hence social cohesion.