Financial Stability Map to be introduced in the financial sector: Minister

During the budget speech in parliament on Thursday, Finance Minister AHM Mustafa Kamal said a Financial Stability Map would be created in the financial sector in line with international best practices to ensure stability of the sector.

A Financial Stability Council is also under formation, he added.

To attain a better understanding of the Financial Stability Map, The Business Standard contacted Former Chairman of the Association of Bankers, Bangladesh (ABB), Nurul Amin.

Amin said, "The Finance Minister's statement on the Financial Stability Map was not entirely clear but I am guessing that he will take some steps to stabilise the financial sector, in which the map will act as a guide."

The map may show amendments to the law, strategies to ensure good governance, or separate measures for public and private banks, added Amin.

Amin also called for assigning qualified and experienced people to the Financial Stability Council.

In Thursday's budget speech, the Minister also said that Stress Testing Guidelines should be formulated taking systemic risks into consideration.

Explaining the guidelines, Amin said that during an economic crisis, the guidelines help to measure how much a bank is capable of dealing with a crisis.

"We have a Stress Testing Guideline at the moment. The Finance Minister perhaps was indicating bringing change to the existing one," Amin added.

In his budget speech, the finance minister outlined several amendments to the law as part of reforming the financial sector, highlighting the rationalisation of interest rates, and incentives for good borrowers.

The Minister also pointed out the need to increase money supply by using various central bank tools so that there is no cash crunch amid the ongoing pandemic.