Monetary Payment System in Bangladesh

2. Monetary and Financial
System
মুদ্রা ও আর্থিক ব্যব্স্থা
Class: 02

3. Monetary and
Financial System
মুদ্রা ও আর্থিক ব্যব্স্থা

4. 1. Money and Monetary System
2. Payment System
3. Financial System
4. Financial Institutions
5. Financial Markets
6. Islamic Financial System
7. Regulatory Framework for Financial and
Monetary System
এই সাব্জেজের ৩টি ক্লাজস আমরা
র্ব্স্তার্রতভাজব্ র্িখজব্াোঃ

5. ▪ Money & Monetary System
Money and its functions, Kinds of Money,
Demand for Money, Measures of Money Supply,
Nominal Vs Real Interest Rates, Creation of
Money etc.
▪ Payment System
Evolution of Payment System, Advantages and
Disadvantages of different payment methods,
Evolution and Growth of Bangladesh Payment
System.
আেজকর ক্লাজস যা যা র্িখজব্াোঃ

6. Money & Monetary System
Module 1 (মর্িউল ১)

7. • Means of Payment in the settlement of
Transactions.
• Accepted as a means of payment or as a medium
of exchange.
What is Money?
অথি র্ক?

8. • Medium of Exchange
• Store of Value
• Unit of Account
Functionsof Money
অজথির কাযিাব্লী

9. • Facilitates exchange of goods and services.
• Eliminates the problem of double coincidence of
wants.
• Promote transaction efficiency.
• Promotes allocational efficiency.
Mediumof Exchange
র্ব্র্িমজ়ের মাধ্যম

10. • People can hold wealth in the form of money.
• Helps settlement of debt.
Store of Value
স্টার অফ ভযালু

11. • Provides society with a convenient measure of
value and unit of account.
Unit of Account
র্িসাজব্র একক

12. • Coins
• Paper Currency
• Deposit Money
Kinds of Money
অজথির ধ্রি

13. • Transaction Motive
• Precautionary Motive
• Speculative Motive
Demand for Money

14. • Supply of money refers to its stock at any point of
time.
• Stock of money refers to the stock of money held
by the public.
Measures of MoneySupply
অথি সরব্রাজির পর্রমাপ

15. 1. Narrow Money (M1):
• Currency Outside Banks + Demand Deposit of the
Banking System
2. Broad Money (M2):
• M1 + Time Deposit of the Banking System
Measures of MoneySupply(Cont’d)
অথি সরব্রাজির পর্রমাপ

16. Rate of interest is known as price of Money.
Price of Money
প্রাইস অফ মার্ি

17. Two factors cause the demand for money to shift:
Income and Price level.
1. Income
• As an economy expands and income rises
✓ Wealth increases and people will want to hold
more money as a store of value.
✓ People will carry out more transaction money.
Price of Money (Cont’d)
প্রাইস অফ মার্ি

18. 2. Price Level
• Real value of money decreases and people will as
an economy expands and income rises, wealth
increases and people will want to hold more
money as a store of value.
Price of Money (Cont’d)
প্রাইস অফ মার্ি

19. Nominal Interest Rate:
• When the interest rate makes no allowance for
inflation.
Real Interest Rate:
• Interest Rate after adjusting for Inflation.
Nominal Vs. Real Interest Rates
ির্মিাল Vs. র্র়োল ইন্িাজরট স্রিস

20. Central Bank:
• Prints money (legal tender money or fiat money)
Banking Financial Institutions:
• Can create money (deposit) against which
cheques (fiduciary money) can be drawn.
Constituentsof Monetary System

21. ▪ Commercial Banks can create money through
Fractional Reserve System.
Amount of new money creation
=
1
𝑅𝑅
× Amount of new reserves
• The term 1/RR is often called the Money multiplier.
Creation of Moneyby CommercialBanks
ব্ার্ির্েযক ব্যাাংক র্কভাজব্ মার্ি সৃর্ি কজর?

22. Payment System
স্পজমন্ি র্সজটম
Module 2 (মর্িউল ২)

23. ▪ Commodity Money
▪ Paper Currency/Fiat Money
▪ Checks
▪ Electronic Fund Transfer Payment
▪ Credit or Debit Card Payment
▪ ACH Payment
▪ eCheck
▪ Wire Transfers
▪ Mobile Payment
▪ QR Code Payment (Contactless Payment)
Evolution of the Payment System
স্পজমন্ি র্সজটম এর ইজভালুিি

24. Payment System: Advantages
& Disadvantages
স্পজমন্ি র্সজটম: সুর্ব্ধ্া ও অসুর্ব্ধ্া

25. Advantages
▪ Most Common and Easiest form.
▪ High acceptability.
▪ No fees involved.
Cash
িগদ িাকা

26. Disadvantages
▪ Difficulties with high value purchases.
▪ Storing and Transporting involve risks.
▪ Counting is time consuming.
▪ Risks of Counterfeiting.
Cash
িগদ িাকা

27. Advantages
▪ Customers may make more and repeat purchases.
▪ Most preferred for high-value purchases.
▪ One can store less cash for transactions.
▪ No fees involved.
Checks
স্েক

28. Disadvantages
▪ It takes time for a cheque to clear.
▪ Risk that cheque might bounce and you won’t
receive your payment.
Checks
স্েক

29. Advantages
▪ Customers may make more and repeat purchases.
▪ High-value purchases can be made safely.
▪ Save time at checkout.
▪ One can store less cash for transactions.
▪ Convenient for foreign travelers.
Debit,Credit and Prepaid Cards
স্ির্ব্ি, স্ের্িি এন্ড র্প্রজপইি কািি স

30. Disadvantages
▪ It takes time for a transaction to process.
▪ Costly transaction fees.
▪ Point-of-Sale devices are needed.
▪ Cards can be stolen and there can be fake
transactions.
Debit,Credit and Prepaid Cards
স্ির্ব্ি, স্ের্িি এন্ড র্প্রজপইি কািি স

31. Advantages
▪ Customers may make more and repeat purchases.
▪ Purchases can be made safely.
▪ Save time at checkout.
▪ One can store less cash for transactions.
▪ No worries about fake cheque or fake cash.
▪ May be more reliable.
▪ Easier transaction for foreign travelers.
MobilePayments
স্মাব্াইল স্পজমন্িস

32. Disadvantages
▪ It takes time for a transaction to process.
▪ Costly transaction fees.
▪ Point-of-Sale devices are needed.
▪ There can be fraudulent activities using mobile
payment systems.
MobilePayments
স্মাব্াইল স্পজমন্িস

33. Advantages
▪ High-Value payments can be processed without
paying hefty fees.
▪ High-Value payments can be made safely.
▪ Quicker and convenient payment processing,
▪ One can store less cash for transactions.
▪ No worries about fake cheque or fake cash.
▪ Convenient for B2B businesses’ payment
processing.
ElectronicBank Transfers
ইজলকট্রর্িক ব্যাাংক ট্রান্সফারস

34. Disadvantages
▪ Non-Business customers may not feel
comfortable.
▪ One has to wait for transactions to process.
▪ This type of transaction needs to be set up with
banks and customers’ banks, which may be an
additional operational work.
ElectronicBank Transfers
ইজলকট্রর্িক ব্যাাংক ট্রান্সফারস

35. Advantages
▪ Allow Customers to pay without physical card.
▪ More secured compared to a physical card.
▪ All smartphones are equipped with a mobile
wallet.
▪ Quick and Efficient checkout process.
Disadvantages
▪ Requires you to rent or own a device to process
the “tap” to complete the transaction.
MobileWallet
স্মাব্াইল ও়োজলি

36. Advantages
▪ Contactless payment option.
▪ Enabled in all smartphones and does not require a
specific app.
▪ Does not require a POS or payment terminal to
complete transactions.
Disadvantages
▪ Requires a strong Wi-Fi connection.
▪ May require customers to input credit or debit
card information more than once.
QR (Quick Response)Code
র্কউ আর স্কাি

37. • Cash is most dominant and popular form.
• Domestic cheque system is second most
important.
• Card based payments which include credit-card,
debit card, ATM transactions, POS etc. are gaining
popularity.
• Prior to 2010, payment and settlement, system in
Bangladesh was not at par with the international
best practices.
Evolution and Growth of Bangladesh
Payment System

38. • Bangladesh Bank has started automated clearing
system known as BACH (Bangladesh Automated
Clearing House) from October, 2010.
• BACH has two components:
• Automated Cheque Processing System
(ACPS) and
• Electronic Fund Transfer (EFT).
Evolution and Growth of Bangladesh
Payment System

39. • Mobile financial services (MFS):
Mobile operators network have been used as delivery
channels for extending financial services to the
unbanked (also banked) population.
• National Payment Switch (NPS) and Real Time
Gross Settlement (RTGS) were also introduced
recently.
Evolution and Growth of Bangladesh
Payment System

40. Probable Question for Exam: (সম্ভাব্য প্রশ্ন)
• What is Money? Describe different functions of
money.
• What are the different kinds of money? Explain
them.
• Explain different motives why people demand
money?
• Explain the measures of money supply?
Money & Monetary System
মার্ি & মর্িিার্র র্সজটম

41. Probable Question for Exam: (সম্ভাব্য প্রশ্ন)
• What is the price of money? Explain the factors
that affect the demand and supply of money.
• What are the constituents monetary system. How
money is created?
Money & Monetary System
মার্ি & মর্িিার্র র্সজটম

42. Probable Question for Exam: (সম্ভাব্য প্রশ্ন)
• Describe the evolution of payment system.
• Explain the advantages and disadvantages of
different payment systems.
• Give an overview of growth and evolution of
Bangladesh Payment System.
Payment System
স্পজমন্ি র্সজটম

43. 1. Money & Monetary System
• Money and its functions, Kinds of Money, Demand
for Money, Measures of Money Supply, Nominal
Vs Real Interest Rates, Creation of Money etc.
2. Payment System
• Evolution of Payment System, Advantages and
Disadvantages of different payment methods,
Evolution and Growth of Bangladesh Payment
System.
Recap: আেজকর ক্লাজস যা র্িখলাম

44. Thank You
ধ্িযব্াদ