Recent civil unrest and a five-day internet blackout in Bangladesh have driven a notable increase in cash withdrawals from banks, causing concern among financial institutions. As of May 2024, out-of-bank currency, often termed ‘mattress money,’ surged to Tk 2.7 trillion, pressuring bank vaults.
The unrest disrupted transaction facilities, leading people to withdraw funds to meet living expenses. This withdrawal trend, if sustained, could tighten bank liquidity and slow economic cash flow. Factors contributing to this trend include higher yields on government securities, inflation, festival seasons, and increased deposit rates. Consequently, institutional and individual depositors are shifting funds into government treasuries, further escalating the volume of currency outside banks. Bank officials anticipate normalization of cash withdrawals soon, but continued high withdrawals may impact bank liquidity and overall economic stability.
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