account liberalisation on the back burner. further, the recent crisis of 2008 has also led to a rethinking on the issue of capital flows. it seems that international opinion is moving towards acceptance of capital controls both at the source and the destination, if the situation so warrants. 5. in india, as some of you may be aware, we have “ light ” capital controls. the policy towards capital flows is one of carefully calibrated approach. we began liberalising the capital account in 1991. we view the capital account liberalisation as a “ process ” and not an “ event ”. the path of capital account liberalisation is well calibrated but is subject to change, depending upon the evolving domestic and international economic conditions. why is this gradualist approach? we believe that the benefit of capital flows hinges on pace of liberalisation of the overall economy and market efficiency and in the absence of those, unfettered capital flows could endanger financial stability. therefore, we are guided by the principle that process of capital account liberalisation should progress in tandem with reforms in the financial sector and real sector. 6. nevertheless, capital flows to india remained volatile especially in the last few years. portfolio flows dominated by foreign institutional investors ( fiis ) showed large swings having implications for liquidity, besides complicating monetary and exchange rate bis central bankers ’ speeches management. more frequent changes in the direction and variation in capital flows have been a matter of concern in the context of a widening current account deficit. our policy response to handle capital flows quite often had to switch mode quickly from addressing excessive inflows to sudden outflows. 7. i hope this conference would provide further insight into how to handle capital flows. i am sure that we will benefit immensely from the deliberations. i see that there are a number of good papers, country presentations and panel discussions which will throw more light on the subject. the collaboration with the adb has brought more ede and asian perspective which will provide useful policy inputs to sharpen our skills to better manage capital flows. 8. i once again extend my hearty welcome to you all and wish you a nice stay in mumbai. thank you. bis central bankers ’ speeches

continues to be highly dependent on the future evolution of the pandemic and the success of containment policies. one major reason why we can expect a rebound in activity in the second half of the year is because, when faced with the largest economic shock since the second world war, europe and its leaders showed the unique strength of the european project : by acting together, we can achieve more. the ecb has played its part in this collective effort in the face of an unprecedented crisis. the nature of the pandemic shock called for an extraordinary monetary policy response. we launched the pandemic emergency purchase programme ( pepp ) to help stabilise financial markets and ease our monetary policy stance considerably. the pepp is temporary, targeted and proportionate. it addresses the specific shock at hand, and aims to repair the economic damage and the resulting downward pressures on inflation wrought by the pandemic. in addition, it was also vital that we limited the risk of a credit crunch. so we substantially eased the conditions under which banks can obtain liquidity under our targeted longer - term refinancing operations. banks can now borrow from the ecb at interest rates which can reach - 1 %, under the condition that they are lending to the real economy. six months after we introduced our measures, our policy package has stabilised markets, protected the supply of credit and supported the recovery. this, in turn, should support the return of inflation towards our medium - term objective and safeguard price stability. at the same time, the uncertainty of the current environment requires a very careful assessment of the incoming information, including developments in the exchange rate, with regard to its implications for the medium - term inflation outlook. the governing council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. when you look at the past six months, the ecb has not been the only game in town. our measures have been complemented by forceful fiscal responses at both national and european levels. this has been a critically important factor in alleviating the impact of the pandemic on the labour market and on banks ’ lending. we judge that the economy still needs that support if the recovery is to continue and strengthen further. ambitious fiscal measures by national governments were complemented by a €540 billion european safety net. and with the next generation eu fund, europe took a decisive step forwards as the crisis