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In a sweeping reform to bolster central bank independence, the draft Bangladesh Bank Ordinance 2025 proposes a “double-layer” system for appointing the governor, replacing the current politically driven process.

Under the proposed framework — prepared in line with International Monetary Fund (IMF) recommendations — the president will select the governor from a shortlist prepared by an independent six-member search committee. This move aims to insulate the central bank from political influence and align its governance with global best practices.

Key Reforms at a Glance

Governor Appointment: President to choose from search committee’s recommendations; final decisions in the committee by majority, with the chair holding a casting vote.

Governor Removal: Only possible through the process used for removing a Supreme Court justice.

Mandate: Ensure price and financial stability; sole authority to regulate and supervise all banks and finance companies.

Autonomy: Full policy, financial, operational, and personnel independence; no government representation on the BB board or Monetary Policy Committee (MPC).

Status: Governor’s post upgraded to ministerial level.

Board and Decision-Making Changes
The Bangladesh Bank board will comprise the governor, two deputies, and five to six independent non-executive members — all with at least 15 years’ experience in relevant fields. Interest rates will be set by an independent MPC.

Financial and Functional Independence
The central bank will control its budget, profit allocation, and expenditures, with exclusive authority over monetary policy, financial supervision, and foreign exchange management. Direct financing of government spending will be prohibited.

Transparency and Accountability
The governor will answer to the parliamentary committee, with the BB required to publish its price stability framework, inflation targets, and quarterly financial data. External audits, including by the Comptroller and Auditor General, will be mandatory.

Why It Matters
Governor Ahsan H Mansur said the reforms would empower the central bank to resist short-term political pressures and maintain long-term economic stability. “This is the kind of independence we need — similar to the US Federal Reserve — where technical decisions remain free from political interference,” he noted.

The draft, prepared by a committee led by Sabeth Siddique under the government’s banking sector reform task force, has already received IMF clearance. If passed, it would mark a historic step toward making the Bangladesh Bank a fully independent statutory body.