19. the management of liquidity risk by the market participants has emerged as a very crucial factor in the recent crisis. the rbi has been alive to the importance of liquidity risk management in the indian banking system. we had issued the guidelines on asset - liability management ( alm ) system to the banks as far back as in february, 1999, which stipulated a simple maturity ladder approach to the alm along with certain regulatory gap limits for negative mismatches in the first two time buckets. in october, 2007, we modified the guidelines with a view to adopt a more granular approach to measurement of liquidity risk. in terms of the revised guidelines, the banks are required to capture liquidity risk in time buckets consisting of the next one day, the next 2 - 7 days, the next 8 - 14 days and so on. banks have been urged to make concerted efforts to capture 100 per cent data, including offbalance sheet items, from all their branches in a timely manner. while the banks are required to prepare the “ statement of structural liquidity ” on a daily basis for their mis, for monitoring by the rbi, the statement needs to be sent to the rbi at monthly intervals. 20. besides the alm guidelines, rbi has also issued the guidance notes to the banks on management of credit risk, market risk and operational risk. the banks are also required to adopt formal risk management architecture for effective management of different types of risks, with appropriate high - level risk management committees guiding the risk management function in the banks. such a holistic risk management architecture coupled with the inculcation of a robust risk management culture in the banks is expected to adequately address the risk management imperatives in the indian context. management of systemic liquidity 21. on account of liquidity crunch in the western world, there has been wide - ranging deleveraging in evidence as the global investors were constrained to liquidate their investments in the financial markets. this has also resulted in significant fii divestments in the indian equity markets and the capital outflows from india. this, in turn, impacted the systemic liquidity and also exerted pressure on the exchange rate of the rupee. the rbi intervention in the forex markets also added to the pressures on the rupee liquidity. in this background, the rbi initiated a variety of policy measures to infuse liquidity into the system to enable the uninterrupted flow of credit to the productive sectors of the economy

indicators remain at very high levels, which suggests that the favourable economic developments we are seeing are here to stay for the time being. looking at ecb staff projections, gdp growth rates are expected to come in at 2. 4 % this year, 1. 9 % in 2019 and 1. 7 % in 2020. despite the fact that economic conditions picked up, price pressures in the euro area remained sluggish. while higher oil prices and the robust upswing did cause inflation to grow much more briskly in 2017 than it had one year earlier, headline inflation slipped again slightly at the start of 2018. the subdued domestic price pressures reflect the fact that some countries are still trying to boost their price competitiveness by keeping wages down. but domestic price pressures are subdued even in countries that weren ’ t at the epicentre of the crisis. in germany, for instance, the immigration of workers from other eu countries over the past few years has resulted in a marked decrease in wage pressures. there is also some evidence to suggest that additional factors, such as the increased significance of global value chains, have eased price pressures, and not just in the euro area. however, according to ecb staff projections, price pressures will pick up again due to further rises in aggregate capacity utilisation. the ecb ’ s economists expect the inflation rate to amount to 1. 4 % in both 2018 and 2019, before rising to 1. 7 % in 2020 – in other words, to a figure that is broadly in keeping with our definition of price stability over the medium term. with that in mind, it is no surprise that, for some time now, the expectation on the financial markets has been for net asset purchases to come to an end in 2018 already. but even after net asset purchases have become a thing of the past, the monetary policy stance will remain accommodative. ultimately, the degree of monetary policy accommodation is determined not so much by the monthly volume of net asset purchases as by the overall volume of purchases. and that volume is huge – the eurosystem ’ s asset purchases under the current programme are already worth more than €2. 3 trillion and consist largely of government bonds. that stock of assets will remain steady even after the net purchases are stopped, because the ecb governing council decided some time ago that the proceeds from maturing assets should continue to be reinvested for an extended period of time. furthermore, it announced that its policy rates will remain at their current levels