Why we are becoming looser if the reserve of central bank shrinks down?

 Decreasing the reserve of central Bank or others banks is not a good sign for the development of any country. It is also the failure of monetary policy of any country. 

At the present time, many countries all around the world have been suffering  from a great economic crisis not only for Russia -Ukraine War but also the wrong monetary policy of the Government,

 Adaption excessive  non development  and  unproductive  Government expenditure, in stable condition of oil price in international market, rising up the price value of 

Dollar against other currencies in the international market.

Bangladesh is also facing reserve decreasing problems at the recent time. This is not a good sign for the financial development of our country. According to the statistical data of Bangladesh Foreign Exchange reserves was 32.2  USD born in October 2022.

In September 2022  reserves was 32.9 USD bn (Source # CEIC data). The government of Bangladesh has been taken some incorrect financial policy like as increasing Government employee's wages after some days. In this circumstance undeveloped Government

 Cost has been increased. Besides the Government has taken a lot of money form various Banks including Bangladesh Bank  to  implement mega projects like construction of bridges, flyovers etc. in the country. Due to this reason  there has been a shortage of

 Reserves. Investors and Businessmen have failed to implement all compliance of foreign buyers. Failure to provide the facilities to improve the quality of life of labourers has decreased the export of goods . Shortage of electricity supply has decreased production of

manufacturing goods.  National import cost has increased. Side by side excessive dependence of international oil and gas  has being caused dollar shortage and  reserve shortage problems.

For overhauling recent financial problems, including reserve shortage problem  Government has taken a good decision to take a loan from IMF. Side by side Government could have taken other effective measures such as the Government  can release Government bond in the

 Market. As a result the Bangladesh Bank will be able increased reserve by gaining profit. Try to reduce the huge  cost of import. Meanwhile try to  promote and encourage local industries. Loan should be arranged in easy terms. Try to decrease the discount rate and reduce the reserve requirement.

At the  international level different countries can take necessary steps for reducing  dollar shortage problem, reserve  problem, theprice hike problem of oil, gas and necessary products as their national  perspective. They can cut unnecessary cost from their budget. Federal or Central Bank of those countries can be applied expansionary monetary policy.