How to make Bangladesh Bank autonomy ordinance effective

While most reform initiatives under consideration by the interim government have achieved little progress or, at best, a fragile consensus, its banking reforms have gathered ample momentum among economists and civil society.

- BY BIRUPAKSHA PAUL

The most notable among them is the long overdue Bangladesh Bank Ordinance (Amendment), 2025, which is designed to award long-coveted autonomy to the Central Bank. The ordinance seems good enough to fend off the Finance Ministry should it try, as it did during the Awami League regime, to use the Bangladesh Bank (BB) as its money-printing press in the name of deficit financing. If enacted, the amendment can bring a revolutionary change over the Bangladesh Bank Order of 1972, which has fallen behind the art of modern-day central banking.

The main points of the proposed ordinance include: a) the governor's status which is to be equivalent to that of a minister; b) a search committee which will propose three names for the governor's post; c) the prime minister's advice to the president for the governor's appointment; d) parliamentary approval for the appointment and removal of the governor; e) exclusion of any government bureaucrats from the BB board; f) the governor and deputies to be sworn in by the chief justice; and g) the governor's tenure which is to be increased to six years from four.

While most of them reflect the necessities of modern-day central banking, some of them require corrections so that the governor's appointment remains fair and authentic to uphold the Central Bank's institutional integrity. The ordinance must clarify how the six-member Search Committee, which will propose three names for the Governor's post, should be formed. The Committee members must possess adequate expertise, banking-related knowledge, and ample reputation for wisdom to ensure fairness.