Moving bond trading regulation to hit govt bond market: Raghuram
Rajan
17/06/2014 16:30
Reserve Bank of India Governor Raghuram Rajan today said shifting the regulation of bond trading from the central bank would have an adverse impact on the government bond market, reported PTI. “My personal view is that moving the regulation of bond trading at this time would severely hamper the development of the government bond market, including the process of making bonds more liquid across the spectrum, a process which the RBI is engaged in," Rajan said at State Bank of India's Banking and Economic Conclave. The Governor, however, said the central bank will not stand in the way if the government wants to manage its own debt. "I don't believe the government suffers any less from conflicts of interest in debt management (unlike the views of the FSLRC), but the RBI could well carry out the government's instructions without any loss in welfare," he said Rajan said if the government wants to manage its debt, it may have to initially depend on deputations from the RBI for advice. Rajan said the FSLRC also seems to be inconsistent in its emphasis on synergies and regulatory uniformity. "It proposes all regulation of trading should move under one roof, all regulation of consumer protection should move under another roof, but the regulation of credit should be balkanised – banks should continue to be regulated by the RBI but the regulation of the quasi-bank NBFCs should move to the Unified Financial Agency, a regulatory behemoth that would combine supervision of trading as well as credit," he said. This balkanisation would hamper regulatory uniformity, supervision of credit growth and the conduct of monetary policy, he added.
17/06/2014 16:30
Reserve Bank of India Governor Raghuram Rajan today said shifting the regulation of bond trading from the central bank would have an adverse impact on the government bond market, reported PTI. “My personal view is that moving the regulation of bond trading at this time would severely hamper the development of the government bond market, including the process of making bonds more liquid across the spectrum, a process which the RBI is engaged in," Rajan said at State Bank of India's Banking and Economic Conclave. The Governor, however, said the central bank will not stand in the way if the government wants to manage its own debt. "I don't believe the government suffers any less from conflicts of interest in debt management (unlike the views of the FSLRC), but the RBI could well carry out the government's instructions without any loss in welfare," he said Rajan said if the government wants to manage its debt, it may have to initially depend on deputations from the RBI for advice. Rajan said the FSLRC also seems to be inconsistent in its emphasis on synergies and regulatory uniformity. "It proposes all regulation of trading should move under one roof, all regulation of consumer protection should move under another roof, but the regulation of credit should be balkanised – banks should continue to be regulated by the RBI but the regulation of the quasi-bank NBFCs should move to the Unified Financial Agency, a regulatory behemoth that would combine supervision of trading as well as credit," he said. This balkanisation would hamper regulatory uniformity, supervision of credit growth and the conduct of monetary policy, he added.
