T20 Mumbai Keynote by Dr. Rajan Dr. Raghuram Rajan, Governor, Reserve Bank of India, delivered the keynote address at India's first Think20 (T20) meeting organised by Gateway House with TEPAV, on the "Global Economy and Challenges for Multilateral Policies."  

"We need new rules of the game on policy. And I think we always retreat as central bankers to say we have a domestic mandate. What we need is a political consensus to go beyond domestic mandates to think in this integrated world where monetary policies affect each other, what might be a sensible way of moving forward. I don’t want to pose any easy solutions to this – happy to discuss it in a debate, but it is something that we need to do.

Now even while I say we need a better cohesion, better coordination on at least mandates, I would also say that we have to be very careful in this world, in avoiding financial repression. Let me explain. Even when I say impatient capital flows easily across borders, every country today needs patient capital. In the industrial countries, it’s about financing the long-term pensions that are going to be due in financing the debt of governments. And similarly, in the emerging markets it’s financing long-term infrastructure. One worry is that with the spate of new regulations that are coming up in the financial sector, that it tends to be biased against long-term patient flows in the emerging market because long-term flows have a much higher risk weight, and flows to emerging markets which are lower weight than industrial countries also have a very high risk rate."