.webp)
The Monetary Policy Statement (MPS) emphasised the need for capital markets in the government's ongoing development projects, such as mega projects, and private investment in the energy, power, and transport industries.
Bangladesh Bank Governor Abdur Rouf Talukder unveiled the new MPS for the second half of FY24 on Wednesday afternoon.
It points out that the capital market regulatory body Bangladesh Securities Exchange Commission (BSEC), in collaboration with the Bangladesh Bank and other relevant government entities, has consistently spearheaded initiatives to foster a robust capital and bond market within the country.
The government's ongoing mega projects and private investments in energy, power, and transportation sectors have underscored the necessity for a well-developed capital market, added the MPS write-up.
In a concerted effort, the central bank, BSEC, and the Central Depository Bangladesh Ltd (CDBL) jointly introduced secondary trading of government treasury bonds in the capital market in October 2022.
This move received an overwhelmingly positive response from investors. Presently, 238 treasury bonds are actively traded in the capital market, and several other bonds are in the pipeline for listing, added the write-up.
Additionally, on December 4 last year, the Bangladesh Bank released guidelines for mark-to-market-based revaluation of treasury bills and bonds held by banks, aiming to establish an efficient secondary market for government securities, it added.
Beximco's Green-Sukuk Al Istisna bond started trading in the capital market from December 30 last year. This has also been explained in the monitor policy.
The Islamic Shariah-compliant “Sukuk” bonds have become a regular trading instrument in the capital market, offering investment opportunities for Shariah-compliant banks, financial institutions, companies, and Islamic branches and windows of conventional banks.
Collaborative efforts between the government of Bangladesh, BB, and the International Finance Corporation (IFC) are ongoing to develop a local currency bond market.
The Bangladesh Bank has taken many initiatives by protecting the country’s capital market from the prevailing financial challenges, which have contributed to the dynamics of the capital market, as mentioned in the monitor policy.
According to the MPS, to overcome prevailing economic challenges, the central bank has taken several key initiatives to invigorate the capital and bond market.
Notably, on August 4, 2022, the regulator had allowed banks and non-bank financial institutions (NBFIs) to calculate their capital market exposure based on the investment cost instead of market prices for their held securities.
This initiative bolstered the investment capacity of banks and NBFIs in the capital market.
Furthermore, the central bank updated its guidelines on bank investment portfolios to stimulate bond market growth and expand investment avenues for banks on August 31 last year.
Under the revised guidelines, bonds, debentures, and Islamic Shariah-compliant securities are exempted from banks' market exposure limits.
To encourage diversification of portfolio risks, BSEC extended the investment duration for securities market intermediaries in listed debt securities and treasury bonds until March 2024 from the previous deadline of June 2023 as mentioned in the monitoring policy.
In addition to these global perspectives, the regulator meticulously evaluates recent developments across several domestic economic sectors.
These include the real sector, inflation trends, the money market, the foreign exchange market, the capital market, monetary aggregates, the liquidity status of banks, and the structure of interest rates.
