The New Nation - Internet Edition

Desk Report

Bangladesh Bank has withdrawn $200crore deposit from a number of foreign banks including US Walkovia, which was recently merged with city group in the wake of global recession. The amount was a part of the Bangladesh Bank foreign reserve money.

Bangladesh Bank has decided to withdraw its fund from foreign banks which were even under least risk of being liquidated following the crisis which engulfed the financial institutions worldwide, the worldwide economic recession has deepened during the last 18 months. It was the worst crisis since 1930 which foresaw great recession.

Twelve financial institutions including commercial and investment banks and insurance companies have become bankrupt in UK, US, Germany and Iceland. Rich nations have injected billions of dollar to salvage these institutions. But it has come to little help for them in the wake of severe recession.

Prof Wahiduddin Mahmud has said, the crash in the Wall street has spilled over to the high street. Nobody can ascertain how colossal will be the severity of the situation but the RMG exports from Bangladesh to the rich nations will be hard hit. The recovery of the money which the corruption suspects siphoned off from Bangladesh to the rich countries will be uncertain. The local stock markets where foreign investments are minimal will not be that much affected.

A large part of Bangladesh Bank foreign reserve was also deposited in Bank of Scotland.

It was also withdrawn conceding the interest money as the Bank fell into crisis and sought assistance from Bank of England for recovery. The rest of the banks where Bangladesh Bank reserve money remains deposited were not in immediate danger.

Remittance flow of Bangladesh from the Middle Eastern country is likely to be affected, as the income of the oil producing countries will decrease following the worldwide reduction of fuel oil prices.

Meanwhile, The US Federal Reserve, the European Central Bank, the Swiss National Bank and the Bank of England unveiled further measures to thaw frozen credit markets. They said they would provide unlimited dollar funds to financial institutions via money market auctions.

The UK said it would inject up to £37bn of taxpayer money into Royal Bank of Scotland (RBS), Lloyds TSB and HBOS.

Governments in Germany, France and Italy are expected to unveil their bank rescue plans this week, within an agreed eurozone framework.

Reports said that Germany's financial rescue plan would total about 400bn euros ($545bn;£318bn), with Chancellor Angela Merkel due to make a statement later.

Governments around the world had been racing to throw financial institutions a lifeline before the major markets re-opened.

At the weekend, finance ministers from the main industrialised nations - the G7 - approved a five-point plan to unfreeze credit markets, and a number of countries announced individual rescue packages.

A European plan was confirmed after an emergency Paris summit of the 15 eurozone leaders.