The Bangladesh Bank has implemented a significant tightening measure by reducing the frequency of REPO auctions from five days a week to just two — Mondays and Wednesdays. This decision aims to strengthen the money market, enhance currency management, and control inflation and non-performing loans (NPLs). By limiting access to daily funds through REPO, banks are expected to improve treasury management and reduce reliance on short-term borrowing. This move follows IMF recommendations and is intended to bring discipline to the financial sector amid challenges such as high inflation and substantial NPLs, which currently affect about 10% of the banking industry’s deposits. While this action may temporarily tighten liquidity and potentially raise interest rates, it underscores efforts to stabilize and enhance the resilience of Bangladesh’s financial system.
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