When appointing a businessperson as central bank governor is a rare event

When the United Kingdom appointed a Canadian citizen as governor of the Bank of England, it caused considerable surprise. From 2013 to 2020, Mark Carney led the Bank of England, having earlier served as governor of the Bank of Canada between 2008 and 2013. He earned a reputation for helping Canada weather the 2007–08 global financial crisis, which prompted the British government to appoint him. No individual in history had previously headed the central banks of two different countries. Carney has since gone on to become Canada’s prime minister.

The United Kingdom and Canada are major economies, and Carney’s appointment generated global debate. Bangladesh, by comparison, is a smaller economy; its central bank appointments may not provoke the same level of international scrutiny. Domestically, however, the newly formed government of the Bangladesh Nationalist Party (BNP) has caused a stir by appointing a businessperson, Mostaqur Rahman, from the garments and real estate sectors, as governor of Bangladesh Bank.

It is unprecedented in Bangladesh for a career businessperson to be appointed governor. Globally, too, examples of a full-time business executive being placed at the helm of a central bank are rare.

It is not that the appointment is unlawful. Actually, there is nothing much said in the law about who to be appointed as the Bangladesh Bank governor. The Bangladesh Bank Order, 1972, states that the government shall appoint the governor for a four-year term, renewable at its discretion. It does not specify detailed professional criteria. The previous upper age limit of 67 was removed in 2024 at the time of appointing Ahsan H Mansur. As there is no detailed policy, in practice, therefore, the government’s preference has largely determined appointments.

In many advanced economies, however, there are clearer eligibility expectations. Canada’s legislation, for instance, requires that the governor possess sound knowledge of financial markets, economics, and international monetary systems. Even where statutes are not explicit, countries typically appoint individuals with profound expertise in economics, banking, or financial administration. Political affiliation is rarely emphasised; competence and experience are paramount.

India’s central bank, the Reserve Bank of India, is currently headed by Shaktikanta Das. Though a student of history, he is a career civil servant and former finance secretary. Pakistan’s central bank chief is a career banker with 31 years’ experience and who previously served as deputy governor. He also worked at the Saudi central bank.

Sri Lanka’s central bank governor Nandalal Weerasinghe has extensive central banking experience. He was senior deputy governor of the central bank and also worked at IMF. Nepal’s governor Biswo Nath Poudel is an economist and former vice-chair of its planning commission. Japan and South Korea have appointed distinguished economists; Singapore’s central bank chief has been a senior civil servant.

Bangladesh’s first governor, ANM Hamidullah (1972–74), was the managing director of a major bank, Eastern Banking Corporation (later renamed as Uttara Bank). Subsequent governors included central bankers, civil servants, economists, and former World Bank or IMF officials. Over five decades, no purely private-sector businessperson had been appointed—until now.

From 1974 to 1976, the governorship was held by AK Naziruddin Ahmed, who had previously served as executive director of the State Bank of Pakistan, deputy managing director of the Industrial Development Bank of Pakistan, and chairman and managing director of Sonali Bank. He also worked with the World Bank and the International Monetary Fund (IMF).

He was succeeded by M Nurul Islam, who served consecutively from 1976 to 1987 and became the first career civil servant to be appointed governor of Bangladesh Bank. His successor, Shegufta Bakht Chowdhury (1987–1992), was likewise a civil servant. She was followed by M Khorshed Alam (1992–1996), also a former CSP officer who had served as finance secretary.

The next governor, Lutfar Rahman Sarkar (1996–1998), came from a banking background. Mohammed Farashuddin (1998–2001) was both an academic economist and a civil servant. The eighth governor, Fakhruddin Ahmed (2001–2005), combined experience as an academic, a bureaucrat and a World Bank official. Salehuddin Ahmed (2005–2009) similarly brought experience as an economist and administrator.

Atiur Rahman (2009–2016) was an economist and academic. He was succeeded by Fazle Kabir (2016–2022), a former civil servant who had also served as finance secretary. Another bureaucrat, Abdur Rouf Talukder, appointed in 2022, was unable to complete his tenure and quietly stepped down following the fall of the Hasina government.

In 2024, former IMF official Ahsan H Mansur was appointed governor. Thus, after a succession of civil servants, economists and career bankers, Bangladesh’s central bank has now, for the first time, passed into the hands of a businessperson.

According to Bangladesh Bank’s stated vision, it aims to build a strong, transparent and internationally credible central bank ensuring sustainable growth, price stability and financial stability. This will be achieved through good leadership and good governance. Its mission includes maintaining monetary stability, supervising banks and financial institutions, strengthening payment systems, and advising the government on economic policy.

Under the Bangladesh Bank Order, 1972, its core responsibilities include: 1. Formulating and implementing monetary and credit policy to control inflation, maintaining financial stability through adopting decisions as per the economic situation; 2. Regulating money supply to maintain economic balance; 3. Supervising banks and financial institutions to safeguard systemic stability; 4. Developing secure and efficient payment systems; 5. Advising the government on financial and economic matters to face job and other financial crises.

Modern central banking, especially since the inflationary crises of the 1970s and early 1980s, has placed inflation control at its core. When Paul Volcker led the US Federal Reserve under president Ronald Reagan, the independence and authority of central banks became central to macroeconomic stability. From that period onwards, the responsibility for controlling inflation across the world has rested squarely with central banks. To fulfil this, they must formulate and implement an effective monetary policy. In this regard, the role of the governor is pivotal, not least because the extent to which he can operate independently is of fundamental importance.

Raghuram Rajan was the 23rd governor of the Reserve Bank of India (RBI). While writing about the role of the governor, he observed that a governor is not merely an administrator but something more than that. As the central bank is the last resort to taking loans and at the same time, the guardian of foreign currency, that is why the governor is the chief steward of a nation’s financial risk. The position requires independence, balance, and technical judgement.

According to him, if the central bank governor discharges his responsibilities with integrity, and if he apprehends that the economy may be veering in the wrong direction, it is his duty to sound a warning. As a non-partisan technocrat, he should neither offer unqualified praise for every action of the government nor position himself as a blanket critic of all its policies. It is, in effect, a delicate tightrope to walk. Whenever he speaks, he must weigh both the strengths and the weaknesses of a situation, and calibrate the tone of his remarks with the utmost care.

The governor must, therefore, be unequivocally non-partisan. His responsibilities extend far beyond controlling inflation; safeguarding the integrity and stability of the financial sector is equally fundamental.

In this regard, the experience during the tenure of the Awami League government was far from reassuring. The central bank was widely perceived to have operated at the behest of influential groups. Even as successive financial scandals unfolded and banks were effectively taken over, the regulator was seen less as a watchdog than as an enabler.

It is against such a backdrop that the new governor assumes office. As a businessperson, he is likely to possess a practical understanding of why loan defaults occur, why certain segments of the business community fail to honour their repayment obligations, and why expectations of preferential treatment take root within the system.

For this reason, the governor requires not only the freedom to make independent decisions but also a framework for accountability. Section 38A of the Bangladesh Bank Order mandates that the governor must appear annually before the parliamentary committee associated with the Ministry of Finance to present a report on monetary policy. The use of the word “shall” in the law makes this obligation compulsory.

In practice, however, this requirement has never been observed. Globally, central banks are granted operational independence while simultaneously being subject to clear mechanisms of accountability. In Bangladesh, neither of these safeguards currently exists. Establishing both is now an urgent necessity.