The State Bank Governor said on Monday that the proposed 'Trade Bank of Economic Co-operation' was likely to be operational during this year. She was talking to newsmen after the inauguration of the first meeting of the heads of central banks from ECO countries held at a hotel here.
She said that the proposed bank would finance trade in the ECO region. She said that a banker from Pakistan has already been appointed to head it. Dr Akhtar said that the meeting of ECO representatives would work towards laying the basis for setting up a network of ECO central banks, as was decided in earlier meetings of the heads of central banks of the region.
She said that there had been meetings of the heads of the central banks at different times, and hastened to add that every member central bank has different approach, methodology and monetary policy. Quoting an example, she said that Turkey used to have high inflation rate of about 80 percent. But it had been able to reduce it quite substantially in recent years by targeting the issue in a specific manner. "It is now in the vicinity of 10 to 11 percent."
She said, "Similarly, Pakistan has a very different approach to monetary policy management and the Central Asian Republics are at different stages of the development of monetary policy formulation."
She said: "The issue is: can you agree on a common method or approach?" In reply to a question she said that Pakistan's anti-money laundering legislation "is awaiting parliamentary approval". However, the SBP is setting up a financial monetary unit to deal with the issue.
"In the interim period, Pakistan has a good setup of regulations that help the SBP to watch anti-money laundering process. Iran and Turkey are in the same stages. They are keen to see money laundering checked effectively."
She said that the SBP was consistent on interest rate policy. "We are trying to advocate to banks that they should try to offer effective interest rates to borrowers as well as depositors."
She said that banks have been deregulated and have their own lending and deposit rates, based on the cost of mobilising funds and other related costs.