BB prints record Tk 80,000 crore in FY23

Staff Reporter :
The Bangladesh Bank (BB) injected around Tk80,000 crore of newly printed ‘high-powered money’ into the market in the just-ended financial year of 2022-23 which was the highest amount of freshly minted money in a single year in recent history.

The previous highest was in FY22 where the amount of newly printed money stood at Tk 51,000 crore referring in FY23 freshly minted money surged by 175 per cent ,according to the data from central bank data.

Officials at the Bangladesh Bank said the central bank had distributed a record volume of the print money into government accounts in the last one year through buying the majority of the government securities itself with a devolvement mechanism to ease banks’ liquidity stress.
But economists strike a bit different note that bears a fear of higher inflationary pressure on the already-overheated market that could make a strong bite on people’s wallet.
They say it could give some sort of respite to the banks in the current context for a while, but it could further enhance the risk of inflation as the central bank buys these securities with the funds equivalent to newly circulated money.

Preferring anonymity, a BB official says the government normally borrows money from the banking system to meet budget-financing shortfalls through auctioning government securities – treasury bills and treasury bonds hosted by the central bank.
A Bangladesh Bank official said that, they sold $13.58 billion in FY23 to banks to help them in overseas transactions amid forex scarcity.

It means the banks spent over Tk130,000 crore to buy the greenback, and it builds up pressure on their liquidity.
Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said that the government borrowed high-powered money or print money from the central bank and kept spending into the market that started working into the economy. It raises either productivity or price of products.