The issuance of currency notes in Bangladesh has surged, reaching Tk 3,051.98 billion by April 17 from Tk 2,806.36 billion in January, marking a rise of Tk 24,562 billion in three and a half months. Over Tk 2,700 billion of these notes are outside banks. Despite a contractionary monetary policy, aimed at controlling inflation, the policy interest rate has risen to 8.5%, and bank loan interest rates have soared to around 15%, causing credit stagnation and a 15% drop in imports. Inflation remains high at 9.74%, persisting for 23 consecutive months. The surge in cash issuance is attributed to various factors including heightened demand around Eid and Ramadan, devaluation of the currency, and corruption fostering a cash-centric economy. Notably, 92% of the currency comprises high denomination notes of Tk 500 and Tk 1000. The economy’s reliance on cash, coupled with increased availability of high-value notes, fuels concerns over the burgeoning shadow economy.
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