SEANZA governors’ meet
Bangladesh Bank (BB) Governor Atiur Rahman yesterday underscored the need for strengthening corporate governance in banks, to ensure the stability of the financial sector. “Of course, we have to establish corporate governance properly in each and every bank, so as to make the economy vibrant,” said the governor, while addressing the inaugural session of the day-long international seminar on the 29th Governors’ Symposium of South East Asia, New Zealand, Australia (SEANZA), a forum of the central banks of 20 countries, at a city hotel. The aim of the forum is to foster cooperation and facilitate training of the staff of member central banks, in various aspects of central banking. It is recognised as a unique platform for exchanging views and opinions, particularly on issues of common interest among member economies. Addressing the inaugural session, the central bank governor said the BB is sincerely working to make the financial sector more stable. Structural changes in financial markets, improvements in technology, and faster innovation and globalisation were the three main challenges confronting the attainment of a sound and solvent financial sector, he explained.
To regain financial stability, the central bank has already dissolved and restructured the boards of directors of some banks, said the governor. Moreover, the central bank has imposed penalties on a good number of boards of directors of banks, to ensure the accountability and transparency of the financial sector, added the governor.
Focusing on globalisation, the governor said, “We are now a part of the global economy and that is why we have to take more cautious decisions for the betterment of the economy.”
However, growth is accompanied by risk and complexity, and, recently, banking regulations and supervision have become a more prominent public policy issue, said the governor. He pointed out that the key challenge was that the financial markets were becoming progressively more global, while regulators still largely have a national orientation.
“International co-operation and coordination are needed to improve the stability of the global financial system,” said the governor. The depth and breadth of the financial crisis has given fresh impetus to the authorities around the world to rethink existing financial stability frameworks. “In this perspective, some key questions need to be addressed: Why should financial institutions be regulated? Who needs to be regulated? How—using which tools—should regulation be conducted?” said the governor.
He emphasised that the most important task for the central bank is to maintain public confidence in the banking system and minimise the risks.
After the inaugural session, the governor presented a keynote address on ‘Macroeconomic Environ-ment and Financial Sector Stability—Managing Vulnerabilities and Crises’, wherein he said the global financial crisis of 2008-'09 has resulted in a lingering slowdown in global growth and a surfeit of global liquidity from prolonged spells of macroeconomic imbalances in major advanced economies.
Atiur Rahman called upon the financial institutions to strengthen their monitoring systems, to reduce risk factors in financial transactions. He also suggested that banks and financial institutions should continue small and medium enterprises (SME) and agro-financing, for the country’s socio-economic development. BB deputy governor and SEANZA chairman, SK Sur Chowdhury, delivered the welcome address, in which, he said that the theme of the seminar for this year is ‘Macroeconomic Environ-ment and Financial Sector Stability’. Nepal Rastra Bank governor Dr Yuba Raj Khatiwada and State Bank of Pakistan deputy governor Saeed Ahmad also took part in the symposium, among others, while a professor of Birmingham University, Dr Peter Sinclair, was the moderator.