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Monetary Policy and Sustainability. The Case of Bangladesh

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  • Pierre Monnin

    (Council on Economic Policies)

  • Alexander Barkawi

    (Council on Economic Policies)

Abstract

Central banks have wide ranging effects on the economy and society as a whole. Their decisions on monetary policy and sustainability are closely intertwined. Nonetheless, the links between the mandates, objectives and instruments of central banks and a broad sustainability agenda are rarely reflected in policy debates. Bringing light to this blind spot is critical. The impact of monetary policy is shaped by a myriad of factors — many of which are country-specific. A case in point for this is the key role of a country’s financial system in the transmission of policy decisions to the real economy. The structure of the banking sector, the depth of capital markets, as well as the legal and governance frameworks in which financial transactions take place, are central aspects in that context. Understanding these building blocks and how they define policy space is indispensable for a sound analysis of the connections between central bank actions and sustainability. Against this background, this report focuses on monetary policy and its sustainability impacts in Bangladesh. It lays out areas for exploration and provides initial insights into Bangladesh’s economic development, its sustainability priorities as well as its financial system, and the relationship between these aspects and the country’s monetary policy. It also reviews the mandate, objectives, targets, and instruments of Bangladesh Bank (BB), the country’s central bank, as well as the effectiveness of the transmission channels at its disposal. At the same time, it highlights that knowledge gaps on the topic remain significant. Further analysis will be needed to draw a more complete picture of the country’s monetary policy-sustainability nexus.

Suggested Citation

  • Pierre Monnin & Alexander Barkawi, 2015. "Monetary Policy and Sustainability. The Case of Bangladesh," Discussion Notes 1501, Council on Economic Policies.
  • Handle: RePEc:ceq:discno:1501
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    References listed on IDEAS

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    2. JACKSON Emerson Abraham, 2021. "Financing Sustainable Development: Alleviating Livelihoods In The Forest Sector With Sierra Leone As A Case Study," Management of Sustainable Development, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(2), pages 49-65, December.
    3. Donato Masciandaro & Romano Vincenzo Tarsia, 2021. "Society, Politicians, Climate Change and Central Banks: An Index of Green Activism," BAFFI CAREFIN Working Papers 21167, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    4. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Financial Stability Review, Banco de España, issue Autumn.
    5. Volz, Ulrich, 2018. "Fostering Green Finance for Sustainable Development in Asia," ADBI Working Papers 814, Asian Development Bank Institute.
    6. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Financial Stability Review, Banco de España, issue Autumn.
    7. Etienne Espagne, 2016. "Climate Finance at COP21 and After: Lessons Learnt," CEPII Policy Brief 2016-09, CEPII research center.
    8. Agliardi, Elettra & Agliardi, Rossella, 2021. "Pricing climate-related risks in the bond market," Journal of Financial Stability, Elsevier, vol. 54(C).
    9. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Revista de Estabilidad Financiera, Banco de España, issue Autumn.
    10. Donato Masciandaro & Romano Vincenzo Tarsia, 2021. "Society, Politicians, Climate Change and Central Banks: An Index of Green Activism," BAFFI CAREFIN Working Papers 21167, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    11. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Revista de Estabilidad Financiera, Banco de España, issue Otoño.

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