A+| A| A-

Society, Economic Policies and the Financial Sector

How can central banks ensure that the financial sector serves society better? How can financial sector policies be more closely integrated with national economic policies? How can it be ensured that fi nance functions as a means and not an end in itself?

The future of finance, and in particular saving it from a popular backlash against the global financial crisis and related crisis-management policies, has rightly become a matter of great concern. There is broad agreement that finance has, as in the past, the potential to do good, which should be harnessed by all. However, it is essential to minimise its potential to do harm. In the commendable search for good finance, central bankers do not have just a stake but also a legitimate role to play. From a central banker’s point of view, there are several issues in this search for good finance for the f­uture, but there are three interrelated issues that I want to comment on: (a) how to ensure that the financial sector serves society better; (b) how to integrate financial sector policies better with national economic policies; and (c) how to ensure that the financial industry functions as a means and not as an end in itself.

The discussion here considers many issues raised on the future of finance (e g, Ferguson 2009; Sheng 2009; Chittenden 2010; Roubini and Mihm 2010; Turner and others 2010; Pringle and Jones 2011; CAFRAL-BIS 2011; Blanchard and others 2012; Shiller 2012). My reflections are moulded by not only a decade in central banking but also many years in macroeconomic management in the central government and the Bretton Woods Twins, in addition to a much longer period at state and local levels of government dealing directly with the public. I will explore select themes of operational significance to central banks at the present juncture.

To read the full text Login

Get instant access

New 3 Month Subscription
to Digital Archives at

₹826for India

$50for overseas users

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Investment in research or in scientific activity is ultimately a community decision, supported by public funds. Scientists, therefore, have the...

Empirical data from the last two-and-a-half decades tells stories of upper-caste hegemony and lack of lower-caste representation in Indian media....

In recent times, the right to speech, expression and the right to protest have been constantly undermined. An attack on these rights runs contrary...

This article argues in favour of dismantling the Industrial Disputes Act. For several decades now, the provisions in the IDA have been the leading...

The presence of status quo bias and information asymmetry in the market of menstrual products as deterrents for urban, educated menstruating women...

This article raises wider questions like whether the social sciences have been able to provide any meaning to the Covid-19 crisis by exploring the...

As a signatory to the 2030 Agenda for Sustainable Development, India is committed to ensure equal access to all levels of education and vocational...

There is a tendency to view the threat to judicial independence in India as emerging from the executive branch, and occasionally the legislature....

COVID-19 and the resultant lockdowns have severely curtailed the mobility of persons with disabilities, restricted their ability to seek basic...

The extraordinary nature of the crisis faced by the Congress means that the revival of the party is necessarily predicated upon its renewal. This...

Back to Top