Archive for January 11th, 2023

Explainer: What is the Indian government’s green bonds programme?

January 11, 2023

The Indian government released the framework for sovereign green bonds in November last year. The central bank followed in the New Year by announcing an issuance calendar for these bonds on January 6.

I explain in moneycontrol the green bonds framework and the issuance calendar.

Dr. Michael Debabrata Patra re-appointed as RBI Deputy Governor for one year

January 11, 2023

Michael Patra was appointed as DG of RBI on Jan 15 2020 for a period of three years and has been reappointed for another year.

Despite many articles and posts, the government does not get the appointment rules. The rule to appointing people at key policy positions is to give them a tenure which is long (enough), non-renewable and non-dismissable (barring exceptional circumstances). But we do the opposite of short, renewable and easily dismissable.

But then one can take solace from the fact that reappointment was done before 4 days of the tenure term.

A template for a central bank leader

January 11, 2023

Stefan Ingves recently retired as GOvernor of Seeden’s central bank. after servong for 16 years. The Sweden central bank organised a symposium in his honor.

Mr Agustín Carstens, General Manager of the BIS, spoke on the leadership lessons one can draw from Ingves’s career:

It is a great pleasure, to speak to you in this celebration to honour Stefan Ingves. He has been at the very core of his country’s central bank during remarkable times, and has been pivotal in at least two ways: strengthening an institution capable of meeting the obligations that come with independence; and anticipating the need to take the next step in the evolution of central bank money.

My remarks tonight will link three themes. First, the demands created by central bank independence; second, the need to ensure that central banks have the capacity to successfully meet these demands; and third, the role of leadership in all this. In Stefan, these themes intersect. He is someone who truly understands what it means when important responsibilities are delegated to the central bank, what that means for institutional capacity and what is required for effective leadership.

On leadership:

 Stefan is not the Riksbank, but leadership makes a difference. Leaders are there to foster institutional capacity, deploying their strategic vision in the process. Strategic vision is about lifting one’s eyes beyond the immediate horizon, and working to develop an institution’s ability to respond to new challenges. Let me illustrate Stefan’s capabilities in this area with three examples.

    • First, Stefan has long understood that setting the policy interest rate is not the be all and end all of a central bank’s monetary policy task. Helped by a career path that includes the oldest continuing central bank and the IMF, he has kept in mind the history of money and monetary systems and the global diversity of monetary control mechanisms. These have made him quicker than most to appreciate the range of instruments that can be useful and efficient in central banking. This appreciation rightly makes him nervous about limiting the instruments in the toolkit just to those suited to peaceful times. A Stefanism that we all agree with is: “at some point, a central bank will need to use the full extent of its balance sheet”.
    • My second example concerns the Riksbank’s exemplary engagement in international forums, including forums that we at the BIS facilitate and in which Stefan himself has excelled – I’m speaking here of his chairing of the Basel Committee and the BIS’s own Banking and Risk Management Committee. The benefits for the Riksbank and for Sweden were by no means immediate or obvious for all to see. But, as Stefan maintains, without some incentive, nobody but the Swedes are going to look after Sweden. Sweden’s influence on the rest of the world, and thus on its own future, will not be very large if it rests just on Sweden’s economic weight. To punch above that weight, Sweden needs to be proactive and engaged. And this helps to explain Stefan’s insistence that the Riksbank “be perceived as a constructive participant in the international arena”.
    • My third example concerns the future of central bank money. Stefan was way ahead of most of us in grasping the need to be flexible about the technology of central bank money. The waning use of paper money by Sweden’s public may have helped him towards that conclusion, to be sure. But Stefan’s early initiatives to evaluate e-money also demonstrates a flexibility of thinking, and a willingness to embrace change. In any event, I’m told that Stefan went to Cecilia Skingsley as early as 2014 to ask her to start thinking about a critical what if – what if the product we currently provide no longer fulfils our obligation to provide a reliable means of exchange? When central bank e-money became one of the possibilities to consider, Stefan met resistance, even from some of his colleagues. The Stefanism that comes to mind here is: “my job is to produce money that people want to use!” Many of us have come to appreciate the implications of that remark.

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