. the minister can appoint 3 members ( non ex - officio ) to the board. as with the central banking act, the new banks and financial institutions act ( bfia ) was enacted in 2000 which broadened and improved the regulation, supervision and control of the banks and finance companies, introducing international best practises. the bank also assumed regulatory oversight of the life insurance and superannuation industries. with the exception of the general insurance industry, the national development bank, the port moresby stock exchange and a unit trust, the bank of png is now basically overseeing the whole financial system. 3. our experiences granting greater independence to central banks is now seen as important to ensuring sound monetary policy management and implementation. our experiences show that legislation changes were crucial to guaranteeing central bank independence. this however had to be undertaken within the context of an overall reform package for the whole finance industry. piece - meal legislative changes, on their own, are not effective. there has to be political will to ensure these changes take place. the central bank independence was reaffirmed in a public announcement by the treasurer in november 2007. this was done to dispel comments that the independence of the central bank should be curtailed or diluted. formulation and conduct of monetary policy for price stability in carrying out its responsibilities under increased independence, the central bank has to perform and be more accountable and transparent to the parliament and the public. before 2000, monetary policy was formulated for a year horizon and announced in the first quarter of each year. the objective of monetary policy was broadly stated as that of providing sufficient liquidity for the non - mineral private sector to grow at a sustainable rate. monetary policy was accommodative of fiscal operations of the government and preoccupied with financing fiscal deficits, especially in the 1990s. the formal process involved the governor presenting the monetary policy stance to the bank board for its approval. then it is forwarded to the finance minister for his endorsement. there can arise a conflict of interest between fiscal and monetary policy, and issue governance and integrity of monetary policy. from july 2000, under the central banking act 2000, debt management and monetary policy per se were clearly separated with a clear and specific objective for the latter – that of achieving and maintaining price stability. the bank can formulate monetary policy for any term it decides. for transparency purposes it must report to the public on a six - monthly basis a monetary policy statement ( mps ), which involves a review of the monetary policy stance

v k sharma : issues in capital account convertibility and lessons from the current financial crisis inaugural address by shri v k sharma, executive director of the reserve bank of india, at the joint reserve bank of india - bank of france seminar on " issues in capital account convertibility and lessons from the current financial crisis ", held at college of agricultural banking, pune, 2 - 3 april, 2009. the views expressed are those of the author and not of the reserve bank of india. * * * mr. jean leviol, minister counsellor for economic affairs, embassy of france, new delhi, mr. gerard beduneau, director, ibfi, banque de france, mrs. isabelle vaillant, deputy director, international and economic relations, banque de france, mr. sanjaya panth, senior resident representative, imf, new delhi, mr. sandip ghose, principal, college of agricultural banking, dr. r. k. pattnaik, advisor, reserve bank of india and dear friends, i welcome you all to the rbi - bdf seminar on " issues in capital account convertibility and lessons from the current financial crisis ". i am indeed very privileged and honoured to be here in the midst of you all this morning. i am particularly very happy to note that the programme is very well conceived and structured what with all the material and relevant topics germane to the subject matter of the seminar – including, no less, the recent report of the bis cgfs working group on “ capital flows and emerging market economies ” chaired by dr. rakesh mohan, deputy governor, reserve bank of india – having been covered with the appropriate focus. the raison d ’ etre of capital account convertibility, as a highly desirable policy goal, is its promise of most efficient allocation of capital and the benefits that it, as a result, brings both to capital importing and exporting countries. the classical text book and, now fairly standard, condition precedent to full capital account convertibility is sound, robust and resilient financial system on the one hand, and the broad based convergence of a country on key macroeconomic parameters like inflation, nominal interest rates, current account deficit, gross fiscal deficit and outstanding debt as a percentage of gdp, on the other. however, significantly the recent financial crisis has thrown into sharp relief, as never before, the critical and important role of “ asset price ” inflation / asset bubbles also, as opposed to that of