’ s intention to practice fiscal prudence. ” “ third, … in theory, a central bank can implement monetary policy appropriately with a wide range of capital levels, including levels below zero. in practice, the danger is that it may lose credibility with the financial markets and public at large, and may then be unable to attain its objective if it has substantial losses and is seen as having insufficient capital. are fears with regard to possible central bank losses illusory? according to the bank for international settlements ( bis ), 43 out of 108 central banks reported losses for at least one year between 1984 and 2005. it is also argued by some that the government can always recapitalise a central bank when necessary. this is certainly true in principle but is practically difficult when the government itself suffers from fiscal pressures and maintains a relatively high debt - gdp ratio, as is the case in india. what is also important is the erosion of central bank independence both in reality and perhaps, even more importantly, in optics. … once again, better sense has prevailed and the government has not raided the rbi ’ s balance sheet. ” ( 3 ) regulatory scope : a final issue is one of regulatory scope, the most recent case in point being the recommendation to bypass the central bank ’ s powers over payment and settlement systems by appointing a separate payments regulator ( also covered by rakesh mohan in his series, ibid ). the reserve bank has published its dissent note against this recommendation on october 19, 2018. conclusion let me conclude with some notes of gratitude and dedication as well as some for further reflection. mr. malegam has been a long - time adviser, friend and well - wisher of the reserve bank of india, as well as its former board member. he is someone i personally admire for his intellect, clarity of thinking and sagacity. i thank you, mr. malegam, for inviting me to deliver the a d shroff memorial lecture for this year. the late ardashir darabshaw shroff served as india ’ s non - official delegate in 1944 at the united nations “ bretton woods conference ” on post - war financial and monetary arrangements. one of his primary concerns was to seek a permanent seat on the executive board of the international monetary fund and the world bank, which unfortunately did not materialise. to me, his most important contribution was the co - founding in 1954 of the free forum enterprise think tank which through open dialogue presented a counterpoint to the socialist tendencies

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