stage of policy concern. the international standard setters have been attempting to achieve convergence by issuing broad principles that should inform national regulatory frameworks, which are peer reviewed under the aegis of the financial stability board and the basel committee on banking supervision for ensuring cross - border harmonization. while formulating national regulatory policies, national authorities are expected to exercise constrained discretion on certain aspects. as regards adoption of global regulatory reform agenda by india, it needs to be mentioned that a number of measures based on the principles that are now accepted internationally were already brought into practice even before the recent crisis. these included stringent liquidity requirements, countercyclical prudential measures, not recognizing in tier i capital many items that are now sought to be deducted internationally, amortization of profits from sale of securitized assets to spvs over the life of the securities issued, not reckoning unrealized gains in earnings or in tier i capital, etc. the same applies to payment and settlement systems as well. notwithstanding the above, the adoption of new principles will no doubt pose challenges in certain areas. a concern which has been raised globally is that the adoption of basel iii capital requirements by banks would push down their roe to an extent. this could have implications for investments into the banking sector. however, it is expected that by looking at the benefits of implementation of basel iii capital requirements by way of increasing resilience of the banking system, investors will get adjusted to the new reality. though indian banks have an undisputed advantage of a strong starting base in the form of a higher crar with a larger component of core equity capital therein, going ahead raising additional capital would be a big challenge. this has to be overcome by carefully calibrated capital planning exercise by the management of banks and rbi and the government of india being the owner of public sector banks will have to play a proactive role in this process. bis central bankers ’ speeches the broader endeavour of global convergence in the banking or payment system regulations would, however, have to account for the country - specific idiosyncrasies to enable customized adoption of guidance of international standard setters as already recognized in many cases. for instance, the bcbs guidance on the conduct of the countercyclical capital buffer for india may require some adjustment / changes as the recommended matric of credit - to - gdp ratio could potentially adversely impact the structural drivers underlying credit growth in india. thus, there may be a need for some

a major tax reform, involving major tax cuts. how do europeans see tasks on the fiscal side? in europe, there are two different discussions. one is on the level of the deficit, or “ fiscal stance ”, the other on the composition, i. e. the quality of public finances. in all countries, there is scope to make public finances friendlier to growth, in particular to reduce non - productive public spending and cut distortionary taxes. but not many countries have fiscal space, because their public debt is too high. their priority should be to use the current economic expansion to rebuild fiscal buffers, so that when the next 1 / 7 bis central bankers'speeches crisis hits, they can use fiscal policy to react to it. in the meantime, they can still improve the composition of their public finances. there are a few countries, including germany, that do have fiscal space. these countries should use that space to prepare for the future, although it is not for the ecb to tell them how to do it. so europeans need to carry out their own fiscal agenda, not follow the us? it ’ s not for the ecb to comment, but i don ’ t see a great appetite among european leaders to follow the us example at the current juncture. what are the risks to europe ’ s economy? risks are broadly balanced in our view, with positive risks coming from the euro area and negative risks coming from outside. the latter include geopolitical risks and risks stemming from emerging market economies. at a deeper level, we see risks to global growth resulting from the erosion of support for international trade and openness. europe clearly remains committed to openness and international cooperation. we are open for business. we don ’ t agree with those countries which want to curb international trade. and let me add a more political remark. in a world which is more uncertain and volatile than ever, europe can project itself on the world stage and work jointly with china to provide stability. what are the positive risks from europe? history tells us that people tend to underestimate economic downturns and, likewise, in an upturn, there is a risk of underestimating the strength of the economy. for instance, we see very positive dynamics stemming from investment and domestic demand, and this creates positive multiplier effects. ii. central banking with the recovery turning into an expansion, it seems we are still not quite seeing monetary policy normalisation ( qexit and rate rises )