Taka in Crores

19

20000
40000
60000
80000
100000
120000
140000
160000

0
95
19 -96
96
19 -97
19 97-
98 98
19 -19
99 99
20 -20
00 00
-2

M1
20 0 01
01
Over the years

Years
20 -02
02

M2
20 -03
03
20 -04
Comparison Between M1 & M2

04
-0
5
MAJOR FINDINGS:

Narrow Money

From the statistical data, we see that the supply of narrow money is always increasing
from the year 1995-96 up to 2004-05 and the supply of M1 was increased 5% - 15 % in
these years. That indicates that the gap between the sum of total money printed, demand
deposit and deposit with Bangladesh Bank other than DMB to currency in tills of deposit
money banks is always in increasing trends up to 2004-05. The impact of increasing
supply of money may be the depreciated trends of Taka against dollar and inflation in our
economy.

Broad Money

As because of the increasing trends of M1 usually acts an accelerator for the increasing
trends of M2. M2 is also increasing significantly over M1, which means the total amount
of time deposit is also increasing significantly over the years. The reason behind the
increasing trends of M2 over M1 is people of Bangladesh are becoming more interested
to deposit their money in bank due to very attractive interest rate.
REFERENCES

 Compilation of Dr. Toufic A. Choudhury

Reading Materials on Principles and Practices of Banking (506).

 Economic Trend
January 2006, Published by Bangladesh Bank.