The outgoing Reserve Bank of India's(RBI) Deputy Governor has raised the concern for current global economy outlook. At the outset of the Indian Merchants Chamber's conference on 11 May 2009 ,eminent economist Dr Shankar Acharya has indicated 2009 as a painful year for global economy. The current global meltdown is the outcome of the housing bubble generated in US and Europe along with the easy monetary policy, which flow liquidity in economy.
Overall weak policy regulation has somehow responsible to the current financial meltdown, he added. Outlook for the year to come is not optimistic.
Already leading global economy moderators like IMF and World Bank has reduced growth objective and expected further fall. One of the major reason could be the longer recovery in industrial countries. At the same time major financial institutions in USA are still under stress and their capability to capture new risk is quite lower, added by Dr Acharya.
Deputy Governor of RBI, Dr Mohan had similar view. He said, the frail monetary policy led to the global financial crisis. Capital flows into emerging markets were seen negative in 2009, he added. On the issue of the Indian banking sector, he remarks that he had not seen any banking problem in India. Non-performing assets have not upped sharply, despite the high credit growth that we saw in 2004-07, he added.
Volatile monetary policy has impact on exchange rate , capital flow ,and stock market. The lesson from the current global crises is how to conduct monetary policy in different countries. According to the Dr Mohan, in good time Capital adequacy ratio should maintain at high level, which will support financial institutions in bad time.
Overall weak policy regulation has somehow responsible to the current financial meltdown, he added. Outlook for the year to come is not optimistic.
Already leading global economy moderators like IMF and World Bank has reduced growth objective and expected further fall. One of the major reason could be the longer recovery in industrial countries. At the same time major financial institutions in USA are still under stress and their capability to capture new risk is quite lower, added by Dr Acharya.
Deputy Governor of RBI, Dr Mohan had similar view. He said, the frail monetary policy led to the global financial crisis. Capital flows into emerging markets were seen negative in 2009, he added. On the issue of the Indian banking sector, he remarks that he had not seen any banking problem in India. Non-performing assets have not upped sharply, despite the high credit growth that we saw in 2004-07, he added.
Volatile monetary policy has impact on exchange rate , capital flow ,and stock market. The lesson from the current global crises is how to conduct monetary policy in different countries. According to the Dr Mohan, in good time Capital adequacy ratio should maintain at high level, which will support financial institutions in bad time.
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