Country's apex trade body FBCCI has recently sent a proposal to the Ministry of Commerce to include law of using alternative networks for international transactions.
In order to reduce the complexity of using foreign currency and increasing tensions in exchange rates, the proposal also mentions the fact that international transactions can be done using the currencies of other countries in addition to the dollar.
Paragraph 7 of FBCCI's proposal on international transactions management has mentioned the agreement of Bangladesh Bank with European Central Bank (ECB), Bank of Russia, Bank of China to facilitate mutual transactions.
In addition, in order to reduce costs in international transactions as well as to avoid risks and sanctions, in parallel with US’s SWIFT, the use of Bangladesh's alternative economic transaction network ECB and Russian SPFS (System for Transfer of Financial Messages) is proposed in Section 9.
Currencies offered by FBCCI for transactions include Dollar, Pound, Rupee, Euro, Yen and Ruble. 'Exchange Agreement' and 'Currency Swap' systems have also been mentioned in the use of these currencies.
The country's top trade organization has asked to include these issues in the proposed 'Trade Management, 2022' law. After the drafting of the law, the Ministry of Commerce has sought the opinion of various organizations and trade organizations on it. FBCCI sent these recommendations on the draft law on August 30.
FBCCI’s first vice-president Mostofa Azad Chowdhury Babu tol Bangladesh Pratidin that after the war in Ukraine, there is a change in international trade. In this situation, there is no opportunity to depend on any one medium in foreign transactions. We need to develop systems.
“The central bank has allowed the use of Chinese currency. Along with China we have the largest trade with India. Apart from this, the opportunity to collect Indian rupees is also more than other currencies,” he said.
“It will be more beneficial for traders to do international transactions in Indian Rupees rather than Russian Rubles,” he added.
Mostofa Azad Chowdhury Babu also said at present most of the international transactions are organized by SWIFT. Money cannot be transacted directly through this network. It simply sends the payment order online and communicates the message to the customer through the message code.
However, some alternative systems have been developed for this safe medium of financial transactions. These include Russia's SPSF and China's Crossborder Interbank Payment System or CIPS.
Several Russian banks have been banned from the international payment system SWIFT since the start of the Ukraine war. As a result, discussions are going on between the relevant departments of the government on what will be the transaction process of Bangladesh with Russia.
In the meantime, after the central bank approved the opening of accounts in Chinese currency, there is a possibility of the banks of Bangladesh to join the network CIPS for Chinese transactions.
According to source, Bangladeshi commercial banks are not interested in joining the network of SPSF due to fear of Western sanctions. As a result, the possibility of setting up trading opportunities with Russia in the alternative 'currency swap' system is being explored.
Mahbub Ahmed, Former Senior Secretary of the Ministry of Finance and Member of the Board of Directors of Bangladesh Bank told Bangladesh Pratidin that FBCCI's proposal to use other currencies in addition to the dollar is correct. This is in line with the government policy.
“However, an alternative to SWIFT requires more caution when engaging in financial transactions through the Russian (SPFS) network,” he said.
Commerce minister Tipu munshi said,”Our finance minister said, to reduce dependence on the dollar; in that case, other currencies including Euro have been mentioned.”
“This is a very technical matter; I don't know if it is possible. Since the talk is there is a possibility, efforts are also underway. Because the dollar rate is fluctuating. Price cannot be determined. The Ministry of Finance is thinking about this, I hope a good result will come,” he added.
Indian State Bank's instructions for transactions in rupees with Bangladesh: India's state institution State Bank of India has issued guidelines for the use of taka and rupee in commercial transactions with Bangladesh.
Mohd. Humayun Kabir, Bangladesh Bank Executive Director (Foreign Exchange Policy Department) told Bangladesh Pratidin that they heard about the notification of State Bank of India.
He also said that he will discuss the issue with the policy makers of the central bank.
@ The news was published in print and online versions on the Bangaladesh Pratidin on September 21 and rewritten by Tanvir Raihan in English.
