Raising CRR: What Bangladesh Bank gains, public loses

>> M. A. Taslimbdnews24.com
Published : 29 June 2014, 10:21 AM
Updated : 29 June 2014, 10:21 AM

Bangladesh Bank (BB) has slapped on an increase in the cash reserve ratio (CRR) by one-half percent on the commercial banks. The CRR now stands at 6.5 percent. It is unlikely that many people will be familiar with this term or what it implies. CRR (also known as required reserve ratio) is the percentage of total deposits of a bank that it must hold as reserves with Bangladesh Bank. This is meant to be a precautionary holding against sudden shortages of liquidity and run on banks. However, these days it is also used by many central banks as an additional monetary policy tool. The central bank can influence the money supply and interest rates, and thereby economic activities, through variations in the CRR. (Read More)