A team from the University of Dhaka, Bangladesh, toured Sacred Heart University in April and signed a formal agreement of partnership between the two universities.
The day’s agenda included a presentation in the Martire Forum about “Monetary Policy in an Emerging Country,” given by Atiur Rahman, former governor of Bangladesh Bank (the central bank of Bangladesh, BB) and now a professor in the University of Dhaka’s Department of Development Studies. He was introduced by SHU’s own Khawaja Mamun, chair of SHU’s Department of Economics and Finance. The audience included Lucjan Orlowski, director of the doctoral program in finance in the Welch College of Business, other economics faculty and students from the economics program.
Rahman discussed how Bangladesh dealt with the global financial crisis of 2007-2008 and how the country has fared since, through its thoughtful and steady approaches and strategies. Statistically, Bangladesh has experienced 6.5 percent annual economic growth on average, which is much better than other emerging markets and more than double the world average, Rahman said. He attributed this success to several factors.
“Our monetary policy went beyond the main mandate of addressing the crisis, to reach the people who really matter. We wanted to be more inclusive and socially responsible. As a result, our financial stability has been unparalleled over the past seven or eight years and during my governorship,” he said.
Rahman described the world climate after the crisis as marked by large-scale quantitative easing in advanced economies, markets flooded with liquidity and rock-bottom interest rates. The BB’s approach, he said, was to seek price stability while supporting output and employment; institute a new emphasis on the quality of monetary policy implementation; combine short-term business cycle fluctuation with a long-term sustainability agenda; and focus on technological and market infrastructure, regulatory framework and refinancing initiatives, all while improving monetary transmission channels.
Adding more specifics about the BB’s response to the global financial crisis, Rahman said the bank launched motivation and awareness campaigns, offered policy support for financial inclusion like green financing and no-frill accounts for farmers and the disadvantaged, created a market development agenda to support medium- to long-term finance (with support from the World Bank) and made regulatory upgrades.
Rahman reported “fantastic outcomes” with regard to the effectiveness of the BB’s initiatives, including high average growth (5.7 percent) and low volatility; poverty reduction from 92 percent in 1970 to 27 percent by 2010; an increase in the labor force, from 20 million in 1974 to 51 million in 2010; a migration to mobile financial services, which built up to 32 million clients between 2011 and 2015; and evolution from cash-based economy with brick-and-mortar banks to digital, more accessible and wide-reaching agent banking.
He said he looks to the future with optimism but also caution, suggesting that the banking institution must manage economic and regulatory policies effectively in a globalizing world, be experimental with knowledge pursuits, deliver quality service and manage digitization.
Mamun said Rahman’s visit was an honor, noting, “Our students got an excellent opportunity to meet an ex-governor of a central bank from an emerging country.” Regarding Rahman’s talk, Mamun observed, “His monetary policies are different—inclusive and assisting the poor.” Orlowski described the BB’s policies under Rahman as having a unique “Bangladeshi flavor,” taking into consideration the societal needs.