The Reserve Bank of India today released the Volume for the First International Research Conference (FIRC) on ‘Challenges to Central Banking in the Context of Financial Crisis’. The Volume, edited by Dr. Subir Gokarn, Deputy Governor, brings together the papers and proceedings of the FIRC and gives a flavour of the issues and discussions on them. The key messages from the Conference are:
- National policies alone cannot prevent a crisis even if these are the most appropriate unless some of the global challenges are addressed collectively at the global level. The international monetary system has been found inadequate to tackle global imbalances, which had to manifest in the form of crisis or the other at some stage.
- The significance of the unprecedented and co-ordinated action led by G20 in avoiding another Great Depression needs to be recognised. In view of the difficult years expected, we must sustain the global approach despite domestic differences in policies.
- Self-regulation and vigilance by creditors do not represent effective substitutes for regulation and it has to be the responsibility of the public policy to provide regulatory systems. The need has arisen for both a new approach to regulatory oversight that includes macro-prudential regulations and a major reworking of the mandate of monetary policy to include financial stability.
- Flexible inflation targetting is important in the context of apprehensions expressed in some quarters about inflation-focussed monetary policy involving the possible neglect of asset price bubbles and the financial stability objective.
- Lender-of-last-resort facility and financial regulations were generally seen as necessary prudential instruments to safeguard financial stability, though they were not deemed to be sufficient.
- Fiscal problems of the industrial countries could be much larger than the official debt figures seemed to suggest.
The discussions and analyses in the Conference Volume are relevant for the events currently playing out in the global financial arena and would need to be heeded by all policymakers – present and future.
The publication is priced at `1295.00. Copies of the publication can be obtained from:
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Press Release : 2010-2011/1759