Speaker : Shri Anand Sinha (former Deputy Governor, Reserve Bank of India)

Abstract : The Global Financial Crisis, among other things, showed a serious flaw in the regulatory policies. While the notion of financial stability was very much a part of Central Banks’ implicit remit, monetary policy was not considered an appropriate tool to deal with financial imbalances and the regulatory policies were focussed on individual institutions with no policies available to deal with systemic risks. Macroprudential policies have evolved to address this gap.These policies employ several tools which are essentially regulatory tools but applied at system level. It is an evolving area and hence there are several questions around it – the transmission mechanism and the strengths and weaknesses of the various tools, interaction with monetary policy- should monetary policy have a role in preserving financial stability,institutional mechanism for macroprudential regulation,and accountability of macroprudential regulator etc. There are different viewpoints leading to different approaches and different experiences though somewhat limited and it will be a while before reasonable consensus emerges.In this talk we would cover these issues.