% of the banking business was in fully public sector - owned banks ten years ago, it is now less than 10 %, since there is a mix of public and private ownership in most of the public sector banks. in fact, in many large public sector banks, foreign ownership is close to domestic private ownership. the two largest private sector banks have foreign ownership of about 70 %. the shares of most domestic banks are quoted and traded in local stock exchanges and if stock market is any indication of the outlook, the prospects for public sector banks are bright. in this process of reform in the banking sector, the legacy problem of non - performing assets were managed by the public sector banks themselves - with no banking crisis or ex post fiscal bail out. the government has actually benefited from the infusion of some capital in the public sector banks which was done to comply with the reserve bank's prudential regulations. by all accounts, the banking system as a whole has improved in terms of efficiency and resilience gradually, with the mix between public and private and domestic and foreign banks, changing incrementally to enable non - disruptive enhancement of competitive efficiency and stability. along with continuous rebalancing within each sector, harmony in reforms across sectors is continuously sought. in a way, the complex tasks of timing and sequencing of reforms in india have been managed through continuous rebalancing within a broadly harmonised policy - framework, often incrementally and rarely in a dramatic fashion. for example, the progress in reforms in monetary management and financial sectors has been impressive, and in the external sector, de facto, very significant. progress in the fiscal sector has not been as rapid, influencing the pace of reform in the financial and external sectors. similarly, flexibilities in the real economy are necessary if the fruits of marketisation are to be obtained without the attendant risks. several rigidities, especially in the regulatory environment and the agriculture sector, are being gradually removed and reform in other sectors cannot be out of tune. finally, clarity in property rights, enforcement, dispute resolution etc., on an expeditious and reasonably predictable basis is also being pursued on several fronts, so that further progress can be made – say, in pricing of risks by banks as efficiently as they happen in developed economies. our experience in regard to development and regulation of financial markets differs from that of developed economies. the latter experienced a co - development of markets, regulations, and practices within the economies and

”, the use of a currency may expand or shrink quickly due to network and scale effects : the more people use a currency, the more attractive it becomes. this begs the question of possible “ spheres of influence ” appearing in the future with significant evolutions in the respective role and weight of existing currencies. in my remarks, i will simply define such “ spheres of influence ” as parts of the world economic system where the use of a specific currency might dominate. with this strict definition in mind, i will make four main observations. an asymmetric world first, the current world is highly asymmetric. two major currencies – the us dollar and the euro – account for most of the foreign exchange reserves. one of them, the dollar, clearly dominates in financial markets and payment systems. this asymmetry has many well - known and self - reinforcing consequences. us monetary policy has significant effects well beyond the us economy. those monetary spillovers may be especially important when unconventional monetary policies are implemented. they cast new doubts on the insulating properties of floating exchange rates. bis central bankers ’ speeches they create new incentives, for many emerging economies, to manage their exchange rate and, for that purpose, accumulate dollar - denominated foreign exchange reserves. as a consequence, most, but not all, of the official liquidity provided through multilateral mechanisms is denominated in dollars. the rise of the euro the major innovation of the last decade has been the rise of the euro. it offers some interesting insights and lessons. most economic models and historical examples suggest that the appearance of new world currencies would trigger huge portfolio adjustments and create major turbulences. economists also hypothesized that, in a multicurrency world, portfolio shifts would create permanent exchange rate instability. none of this has happened. in fact, the euro has neither stabilized nor disrupted the international monetary system. exchange rates have moved significantly but, most of the time, in an orderly fashion and have followed low periodicity cycles. this may be, for the future, an interesting precedent : a new global currency can emerge without destabilizing the system. it is also worth noticing that the euro crisis had no major effect on its international role. in particular, the share of foreign reserves invested in euro securities has barely moved. and, when the swiss authorities decided to peg their currency, they chose the euro as an anchor. does the euro have a “ sphere of influence ”?