inflation, and the like. a simple rule can provide the starting point for the decisions made by the fomc, but in reaching their interest rate decision, members of the committee will always have to use their judgment to identify the special circumstances confronting the economy, and how to react to them. to ensure that monetary policy operates in as stabilizing a way as possible, the fomc will continue to set out, as clearly as it can, the basis of every decision that it makes, and to provide guidance on its expectations of future decisions. and on the basis of the information provided by the fomc, of their understanding of the historical record of fed policy decisions, and of their analysis and expectations of the state of the economy and, particularly, the financial markets, market participants will make the best decisions they can. references ahmed, shaghil, and andrei zlate ( 2014 ). “ capital flows to emerging market economies : a brave new world? ” journal of international money and finance, vol. 48 ( november ), pp. 221 – 48. bank of canada, bank of england, board of governors of the federal reserve system, european central bank, sveriges riksbank, and swiss national bank ( 2008 ). “ fomc statement : federal reserve and other central banks announce reductions in policy interest rates, ” press release, october 8. bernanke, ben s. ( 2010 ). “ monetary policy and the housing bubble, ” speech delivered at the annual meeting of the american economic association, atlanta, january 3. board of governors of the federal reserve system ( 2014a ). “ federal reserve issues fomc statement on policy normalization principles and plans, ” press release, september 17. — — — ( 2014b ). “ minutes of the federal open market committee, june 17 – 18, 2014, ” press release, july 9. — — — ( 2014c ). “ minutes of the federal open market committee, july 29 – 30, 2014, ” press release, august 20. — — — ( 2015 ). “ minutes of the federal open market committee, january 27 – 28, 2015, ” press release, february 18. bordo, michael d., and joseph g. haubrich ( 2012 ). “ deep recessions, fast recoveries, and financial crises : evidence from the american record ( pdf ), ” working paper 12 – 14. cleveland : federal reserve bank of cleveland, june.

subir gokarn : mutual funds and market development in india address by dr subir gokarn, deputy governor of the reserve bank of india, at the cii ( confederation of indian industry ) 7th edition of mutual fund summit 2011, mumbai, 22 june 2011. * * * inputs from sudarsana sahoo, bhupal singh and deepa s. raj are gratefully acknowledged. i. introduction financial sector development can be viewed as a process that enhances four critical attributes of the financial system : efficiency, stability, transparency and inclusion. the emergence of intermediation mechanisms and products that help improve on one or more of these without causing others to weaken are, therefore, a meaningful indicator of financial development. from this perspective, mutual funds play an important role in the development of the financial system. first, they pool the resources of small investors together, increasing their participation in financial markets, which helps both inclusion and the efficient functioning of markets themselves, as a result of larger volumes. second, mutual funds, being institutional investors, can invest in market analysis generally not available or accessible to individual investors, thereby providing services based on informed decisions to small investors. decisions made on the basis of deeper understanding of risks and returns contribute to financial stability, besides helping to mitigate market risk for this group of investors. third, transparency in investment strategies and outcomes, though typically mandated by regulators, is relatively easy to deliver on, so that investors can find out exactly where they stand with regard to their investments at any point of time. as far as regulation is concerned, mutual funds cut across domains. the reserve bank of india regulates three categories of financial markets ; money markets, government securities markets and foreign exchange markets. mutual funds have a presence in the first two and the reserve bank is therefore interested in the role that they play in developing them. in what follows, i shall provide a brief description of the role of mutual funds in these two critical markets and discuss some of the regulatory issues that arise. i shall then make some more general comments about the role of mutual funds in financial inclusion. ii. mutual funds and market development mutual funds have contributed significantly in broadening and deepening of different segments of the money market and, to some extent, the government securities market. money market mutual funds ( mmmfs ) were introduced in india in april 1991 to provide an additional short term investment avenue to investors and to bring money market instruments within the reach of individuals. the guidelines for mmmfs were announced