Archive for August 7th, 2018

RH Patil’s critical role in Building India’s financial market infrastructure…

August 7, 2018

Another superb speech from Dr Reddy.

The speech is given as a RH Patil Memorial Lecture organised by CCIL. Dr Reddy profusely pays tribute to Dr Patil who was was behind many a financial institutions in India which took shape post-1991.  In the process, Dr Reddy tells us about this so called fin market infra and various things that go in building the same.

I am not sure how many of you know that Dr. Patil started his career in 1968 at the then  Economic Department of the RBI. In 1975, he joined IDBI, which he left in 1993 to set up the NSE as its first Managing Director. I am sure all of you know the kind of transformation that NSE brought about in the Indian capital markets. After retiring from NSE in 2001, he joined CCIL in May 2001 as the company’s founder Chairman. CCIL is singularly fortunate to have had a visionary and leader like Dr. Patil being entrusted with the task of setting it up. He was ably assisted by Mr. M.R. Ramesh, the first Managing Director, and a group of dedicated professionals as the initial team. By the time he left in early 2011, CCIL had come to be regarded as one of the success stories in the Indian financial markets. 
Dr. Patil spearheaded the setting up of such infrastructure not only in the equities market, but also in the government securities, money and forex markets. He led several major financial market reforms, and, apart from CCIL and NSE, he created other internationally acclaimed institutions like the National Securities Clearing Corporation Limited (NSCCL) and the National Securities Depository Limited (NSDL) which today stand as pillars of strength for the Indian economy. Under his dynamic leadership, these institutions have transformed  financial markets and introduced products and instruments that have captured the imagination of market players in India and abroad.
I can say without any hesitation that Dr. Patil was peerless as an institution builder in the financial sector of India. Dr. Patil was a multi-talented personality whose involvement was not limited to the financial sector. His contribution to the Disinvestment Commission is well known. He was on several RBI committees, including the Technical Advisory Committee on monetary policy. He was my guru in markets and I learnt a lot from him.

Dr Reddy takes us through formation of CCIL which plays this hugely silent role in India’s financial markets. The lecture is a classic case on how several factors go into building financial institutions…

Israel joins development of Open Banking standard

August 7, 2018

The idea of Open Banking is picking up in countries. Open Banking means information about customers is shared with other providers for providing customised services and products.

Bank of England has been talking about it. Now Israel is also warming up to the idea:


Albert Hirschmann’s CV for job application at Harvard (1942)

August 7, 2018

Irwin Collier has been doing a great job digging archives from different economics departments. He has been telling us how economics questions papers were set earlier, indicating how far we have come when it comes to economics teaching.

In his recent post, he picks this job application of Late Prof Albert Hirschmann at Harvard. I mean even CVs/applications have gone through such a change:


Britain’s economics students are dangerously poorly educated

August 7, 2018

British Media continues to question the quality of economics education in the country:


When economic history improves with time (as macro data is revised)

August 7, 2018

Carmen and Vincent Reinhart in this article point that US macroeconomic data has been revised upwards. This makes economic history improve with time:

 Seldom does a dense report from a statistical agency take your breath away, but the latest publication on the United States’ national income accounts from the Bureau of Economic Analysis (BEA) is the exception that proves the rule. The publication, after all, is the BEA’s comprehensive, bottom-up quinquennial reassessment of income, output, and prices going back to the Model-T days of economic activity.

Wading into the review’s details, one finds a slightly improved outlook for medium-term growth. Moreover, the data on personal saving suggest somewhat fewer vulnerabilities and more resilience in the household sector. On the other hand, the review changes nothing concerning the two yawning holes – the twin fiscal and external deficits – in the national accounts.


The large increase in saving was offset by smaller increases in investment, inventory accumulation, and the statistical discrepancy. Nothing changes the grim reality that America’s current-account deficit is headed to more than 3% of nominal GDP, implying increased reliance on foreign investors. The US is manufacturing the dollars that foreigners crave, but that is it for now.

Moreover, there was no wand that the BEA magicians could wave to alter the dominant feature of the economic landscape: spending by the federal government outstrips its revenues by a wide margin before and after the data revision. The budget deficit will surpass $1 trillion this year, and, with growth already above its potential rate and unemployment well below its natural rate, the cyclical argument for such stimulus is weak. The concomitant accumulation of debt will weigh on future economic activity and exacerbate financial vulnerabilities.

But not now. We have learned that the economy is expanding slightly faster and households were more thrifty than previously thought. Count this as another case of history reading better than it was lived.

Interesting way to term these upward revisions of macro data..

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