the official sector, the question remains pending : has the tail risk scenario really diminished? first, allow me to make two - three general remarks on the global financial markets ’ latest developments before giving you my own insights on the prospects by year - end for the so - called g4 ( us, uk, eurozone and japan ) major currencies, as well as equity and bond markets. • general remarks 1. heightened policy uncertainty while the market outlook stabilises, political risks take center stage, as there is almost one month left ( only 32 days ) until november election day. after brexit any ballot can bring disorder. looking ahead, we will see a busy electoral agenda on both sides of the atlantic. first is the us presidential election, it follows the italian referendum on constitutional reform in early december, and in 2017 there are elections in the netherlands, the czech republic, france and germany. 1 / 15 bis central bankers'speeches italy is set to follow in early 2018. given rising populism, there is a non - negligible risk that one of these events might produce a political “ accident ”. moreover, the prevailing uncertainty is likely already to be acting as a headwind ( figure 1 ). brexit, however, offers an interesting lesson. rather than the dramatic event of imminent recession and financial turmoil feared, it looks set to be a prolonged, slow process driving structurally weaker growth. 2. volatility remains low in fragile global markets following the brexit vote, implied volatilities followed a downward trend towards or below levels recorded at the start of the year. stock market volatility quickly approached the lows last seen in july 2014 and fx implied volatility is trading today near historic lows. volatilities in other markets were less subdued, fluctuating around their recent averages and are still far from their depths in 2014 ( figures 2, 3, 4 ). 2 / 15 bis central bankers'speeches although, markets proved resilient to a number of potentially disruptive political developments, questions linger as to whether the configuration of asset prices accurately reflected the underlying risks. the apparent contrast between record low bond yields, on the one hand, and sharply higher stock prices with subdued volatility, on the other, cast a shadow over such valuations. 3. global growth is continuing along at a slow pace a range of indicators suggest that the euro area economy remained remarkably resilient after the vote. the negative

that were taking root in the country in the post - independence era government. sucheta dalal ’ s biography, a. d. shroff - titan of finance and free enterprise ( 2000 ), notes that george woods, one of the most popular presidents of the world bank, said of him : “ nobody could accuse a. d. shroff of hiding his opinions and in the later years of his life, very rarely were those opinions fashionable in india. yet few patriots did more than he [ did ] to make friends for the indian nation and to build confidence in that nation among those throughout the world whose business it is to provide capital for sound investment opportunities. ” in all humility, to emulate a. d. shroff ’ s freedom to criticize policy “ actuated by the single motive of trying to promote the good of my country ” ( from his letter to sir osborne smith, the first governor of the reserve bank ), i chose for today ’ s occasion the theme of the importance of independent regulatory institutions, and in particular, that of a central bank that is independent from an over - arching reach of the state. this theme is certainly one of great sensitivity but i contend it is of even greater importance to our economic prospects. i earnestly hope that i have done some justice to his immortal legacy to independent economic discourse and policy - making. in the process, i have attempted to convince you that we have made good progress in earning the reserve bank ’ s independence, most notably in the monetary policy framework ( changes wherein, along with the insolvency and bankruptcy code and the goods and services tax, were considered as crucial structural reforms by moody ’ s in upgrading india ’ s sovereign rating eleven months back ). to secure greater financial and macroeconomic stability, these efforts need to be extended to effective independence for the reserve bank in its regulatory and supervisory powers over public sector banks, its balance - sheet strength, and its regulatory scope. such endeavor would be a true inclusive reform for the indian economy ’ s future. thankfully, it is only a matter of making the right choices, which i believe as a society we can with adequately thoughtful “ what - if ” analysis ; i have sketched a scenario, which several parts of the world are presently witnessing, of great risk to nations from undermining the independence of their central banks. in his excellent biography, volcker : the triumph of persistence ( 2012 ), my former nyu stern colleague, bill si