Indian Economy | Way Going Forward – Addressing structural Issues Download PDF
The way going forward for greater strength to the global financial system would require
addressing the structural issues such as:
(1) The bankers committee for banking supervision (BCBS) as a part of basel international settlement (BIS) will have to implement Basel III accord, which should aim at better risk assessment capabilities of global banks, define risk appetite and have sufficient own funds.
It should not lose sight of the fact that strengthening would require capital infusion.
Sufficient time should be given like in the previous accords for smooth transition of banks in different countries to Basel III.
(2) The role of the IMF would need,,to re-structured to play the role of prevention rather than providing cure. They will also have to play a larger role in global supervision to provide the oversight mechanism to the global financial system.
There should be greater clarity in the proposed financial stability board (FSB) in terms of its role and provide independence to the monetary authorities in different countries to pursue independent monetary policies.
(3) Evolving a global code of ethics to provide broad financial discipline such as prudential norms of lending, exposure norms for banks in different economies to follow.
(4) The need for a transparent and fair multilateral trading platform like the WTO can never be more than now. It is in the interest of all economies to put their heads together in evolving a consensus at WTO not only for their own interest but for also long-term sustainability of the global economy.