be sufficient for financial stability and therefore financial stability has emerged as another key consideration for monetary policy, though jury is still out as to whether it should be added as an explicit objective of monetary policy. the fact remains that though the focus of monetary policy is mainly on inflation and growth, the underlying theme has always been financial stability. concluding observations 20. while india emerged relatively unscathed from the global financial crisis, there should be no room for complacency. as a member of the several multilateral institutions, india actively 4 / 5 bis central bankers'speeches participated in post crisis reforms of the international regulatory and supervisory framework under the aegis of the g20 and the basel committee. india remains committed to adoption of international standards and best practices in a phased manner, calibrated to our domestic conditions, wherever necessary. 21. from the perspective of the reserve bank, we will continue to focus on effective communication and coordination with all stakeholders to achieve broader macroeconomic objectives of price stability, growth and financial stability. 1 for instance, these included lending to financial institutions, targeted liquidity provisions for credit markets, outright purchases of public and private assets, purchase of government bonds and forward guidance. 2 basel committee on banking supervision ( 2010 ) : “ basel iii : a global regulatory framework for more resilient banks and banking systems ”, december. 3 to be implemented from april 1, 2020 4 mainly on five emerging - market countries, viz., brazil, india, indonesia, south africa, and turkey ( which were referred to as the ‘ fragile five ’ ) 5 / 5 bis central bankers'speeches

. the indian economy was vulnerable due to the then prevailing high inflation of around 10 per cent and large current account deficit at 4. 7 per cent of gdp. the reserve bank resorted to a host of policy measures including monetary tightening, restriction on gold import, special dollar swap window for public sector oil companies, special concessional swap window for banks for attracting foreign currency non - resident ( bank ) deposits, increase in overseas 2 / 5 bis central bankers'speeches borrowing limit of banks, and raising fii investment limit in government debt. what do we learn? 12. though there is no unique solution to these policy issues confronting the global economy, we could clearly draw three broad inferences : 1. first, as we have discussed earlier, central banks ’ role is important, both during normal as well as crisis times. while mandates for central banks broadly remain the same during both normal and stress periods, the weightage attached to competing objectives and the choice of policy instruments become crucial in the crisis periods. 2. second, communication by central banks is very important which may be different in crisis times than in normal times. not only it helps convey decisions in a more transparent way, it also signals the present and future policy stance of central banks. in fact, unconventional monetary policy measures undertaken by central banks during the crisis period worked mainly through the confidence and signaling channels. the us federal reserve ’ s statement on december 16, 2008 provided a clear forward guidance for the markets. on the other hand, only a mere hint of monetary policy normalisation by the us fed ( popularly known as taper tantrum ) in may 2013 triggered portfolio outflows from some emerging market economies ( emes ) 4. this led to high volatility in equity, debt and currency markets. in fact, such market volatilities in emes could have been avoided through clear advance communication on calibrated withdrawal of monetary policy accommodation. in the indian context, the reserve bank communicates its monetary policy decisions in terms of changes in the ‘ policy repo rate ’ and ‘ stance ’ based on an assessment of the current and evolving macroeconomic situation. the stance of the monetary policy is communicated as neutral, accommodative or calibrated tightening in consonance with the mandate of achieving the medium - term inflation target of 4 per cent ± 2 per cent, while keeping in mind the objective of growth. the reserve bank ’ s approach to communicate the policy stance is to explain it with rationale,