Role of Bangladesh
Submitted To : M. Ahsanur Rahim, School of Business
Bangladesh Bank is the central bank of Bangladesh. It’s core duty is to maintain the financial fluency of our country. On doing so it performs a lot of activities and among them the risk management of other commercial banks is notable. Because on managing the risk of other commercial banks it keeps the economy standing. Some new concept and some old concepts are being combined together by Bangladesh Bank to come up with this relatively new concept of risk management in banking sector by the central bank.
Role in Risk Management by Central Bank: an overview
If we think holistically then risk management is the key for asset management and central bank plays the most important role in it. Risk has always been an important part of investment analysis, and it is particularly appropriate for central bank to look over this prospect as they are considered as the trustees of general public.
Central banks have preferences and constraints that differ from those of private banks. The objectives of central banks are defined in their statutes, which typically specify the maintenance of price stability as their primary mandate.
For central banking policies to be successful, they need to remain credible by making sure that at least two conditions are met.
First, a central bank should be sufficiently capitalised and run in such a way that it remains financially independent. Financial independence helps to keep external parties from unduly interfering in the conduct of monetary policy.
Second, the long-term profitability of a central bank needs to be ensured, so that the bank’s reaction to specific economic circumstances is not influenced by considerations of the short-term financial impact of such policies on its profit and loss accounts.
To make it more precise, central bank backs up all the...
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