ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Michael Debabrata Patra

Priming Monetary Policy for the Pandemic

In response to a once-in-a-century pandemic in which a health crisis rapidly mutated into a macroeconomic and financial shock, the Reserve Bank of India mounted an unprecedented policy response. While the entire response involved an intertwining of monetary, regulatory, and technological measures, this paper focuses on monetary policy initiatives. Distinguishing between conventional and unconventional policy measures, the paper makes an impact assessment in terms of key macroeconomic and financial variables. The lessons drawn from this unique experience are evaluated, with emphasis on framework flexibility, the critical role of communication in anchoring expectations under extreme uncertainty, and the approach of strategic restraint in the face of a normalisation/ tightening bandwagon across advanced and emerging countries. The paper concludes by peering into the near future in which India prepares to manage the spillovers from divergent monetary policies across the world and geopolitical tensions.

Can the SDR become a Global Reserve Currency?

Global economic prospects are worsening rapidly. This has revived the debate on the evolving international monetary system and the international reserve currency that will underpin it. Since the 1940s, the US dollar remains the world's dominant reserve currency. Developments since 2008 have challenged the pre-eminence of the US dollar. The euro appeared to have provided an alternative during 2000-08, but has come under fire since early 2010. Prospects for internationalisation of emerging economy currencies are still limited. The global crisis of 2008-09 has resurrected interest in the special drawing right as an international reserve currency. In this paper, we argue that the SDR fails to meet the main attributes of an international reserve currency - deep and liquid markets, supported by currency convertibility; wide use internationally; macroeconomic and political stability in the issuing country. At this juncture, the critical mass of political will to invest the International Monetary Fund with these responsibilities simply does not exist and/or will take a long time to form. Despite shocks and sometimes acute differences in views on the US dollar, the current system has been resilient over decades, and is likely to remain so for some more years.

IMF Reforms 2010: Do They Mirror Global Economic Realities?

The 2010 round of quota reforms at the International Monetary Fund did not adequately reflect the emerging global economic realities and this must be regarded as a missed opportunity to redress the gross imbalance that has prevailed for several decades. Several "positive" aspects of the reforms have been given high publicity, but they need to be assessed analytically. This paper addresses issues of governance reform at the IMF in the context of the emerging macroeconomic configurations.