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

Off The Shelf

The present global credit crisis has again shown that the supervisory and regulatory structure is out of alignment with the dynamics of the global financial market. When risks are being distributed among different financial institutions, can we live with split regulation? Will regulators continue to have no say in the regulation of rating agencies? It is time that central bankers devise a regulatory structure appropriate for the changed context; one that does not shy away from interventionist regulation.

The tone of the political debate on the Indo-US nuclear deal has been bewildering. What is worrying, as illustrated by this exchange, is that political parties are undermining the culture of dialogue and deliberation that lies at the heart of our democratic polity. Rival speakers have to listen to one another and be prepared to modify their respective positions. It is only through such dialogue and deliberation that political establishments can prove that they are capable of democratically responsible behaviour.

Securitisation of loans has emerged as the driving force in financial markets, transforming radically the way assets in different sectors of the economy are being created and marketed, but this carries the seeds of a crisis which is what has erupted in global markets. It is time we realise that standard conservative banking principles should not be given the go-by in the name of the new fangled, exotic kind of banking. But will this ever happen?

The story of the Medici Bank of 14th and 15th century Florence is the story of how one family used finance to control a government. In the priority that the Medicis gave to financial deals can be found the seeds of the forces of global finance that today wield so much influence on the politics and economics of nation states.