growth in the edes decelerated from 8. 0 per cent during 2004 – 7 to 2. 8 per cent in 2009. it recovered quickly to 7. 3 per cent in 2010. overall, global gdp growth contracted to 0. 6 per cent in 2009 from the robust growth of 5. 0 per cent during 2004 – 07. in the global credit and money markets, the risk spreads had ballooned during the crisis period. the ted spread 3 exceeded 300bps on september 17, 2008 breaking the previous record set after the black monday crash of 1987 and, thereafter, reached an all time high of 464 bps on oct 10, 2008. the 3m libor - 3m ois spread 4 touched the high of 364 bps on october 10, 2008 as against the normal level of around 10 bps. the huge risk aversion was reflected in sharp decline in the stock indices across the globe and heightened volatility. global equity markets witnessed major sell - offs in march 2009. the dow jones industrial average ( djia ) registered the new twelve - year low of 6, 547. 05 ( on closing basis ) on march 9, 2009 and had lost 20 % of its value in only six weeks. the vix index – a widely used measure of market risk and often referred to as the “ investor fear gauge ” – rose to a record high of 80. 86 on november 20, 2008. the yields of the treasury securities plummeted on the back of safe haven demands, with the 10 year us treasury yield touching a low of 2. 05 % on dec 30, 2008. the three month t - bill yield fell to ( – ) 4 basis points, the lowest it has been since 1954 reflecting unprecedented flight - to - safety. the cds spreads widened markedly. ted spread = 3m usd libor minus 3m us t - bill yield. it is an indicator of the perceived credit risk in the general economy. the long term average of the ted has been 30 basis points with a maximum of 50 bps. it reflects counterparty credit risk premium and watched as barometer of distress in money markets. bis central bankers ’ speeches the major cds indices 5, i. e. cdx cross over, cdx investment grade, itraxx europe crossover and itraxx europe, touched the highs of 699 bps, 242 bps, 1150 bps and 206 bps respectively during march 2009. in a parallel development,

, and analyses covering a wide variety of markets ”. in this background, perhaps this is a proper occasion to share with the distinguished gathering today some of my thoughts on dilemmas faced by central banks in their communication policies and the multiple effects of the media. this will be followed by a brief narration of initiatives taken by select central banks and then by a more detailed account of dissemination policies and practices of the reserve bank of india. central banks ’ dilemmas the functioning of the central banks has generally been considered highly secretive if not entirely to be an ivory tower. in fact, a book by william greider on the federal reserve published as recently as 1987 is titled “ secrets of the temple ”. the situation has changed, however. for instance, the european central bank ( ecb ) like most other central banks in the world, is laying greater emphasis on its communications policy, as acknowledged by mr. otmar issing about a year ago. in fact, mr. issing explained the communications problem in the context of “ euro ’ s external exchange rate ” and the rather mixed opinion of the ecb despite its success in its main task. it is clear that the approaches of central banks to communications have changed. what are the reasons for this change? traditionally, central banking policy formulation has been associated with an element of secrecy, and for good reasons, a central bank was considered to be an arm of government. furthermore, financial markets and entities were tightly regulated and functioned the way regulators would like them to behave. however, with financial deregulation and increasing cross border flows, the central banks of most countries have gained some degree of autonomy and with it a sense of accountability. hence, central banks do see some advantage in communicating in as transparent a manner as is appropriate, their policy intentions and operations. well informed market participants enable, though not assure, improved functioning of markets. of course, the policy maker cannot reveal policy cards as it is advisable to maintain an element of surprise or avoid anticipatory actions. yet, in all cases, either exante, or concurrent or at least ex - post, adequate communication of rationale for policies and operations is expected now and, in my view, this is desirable. there are several dilemmas faced by central banks while designing an appropriate communications policy. what should be communicated and to what degree of disaggregation, are one set of issues. the second set relates to : at what stage of evolution of internal thinking and debate