, neutrality or accommodation to guide the markets and the public on the likely future course of policy. one thought that comes to my mind is that if the unit of 25 basis points is not sacrosanct and just a convention, monetary policy can be well served by calibrating the size of the policy rate to the dynamics of the situation and the size of the change itself can convey the stance of policy. for instance, if easing of monetary policy is required but the central bank prefers to be cautious in its accommodation, a 10 basis points reduction in the policy rate would perhaps communicate the intent of authorities more clearly than two separate moves – one on the policy rate, wasting 15 basis points of valuable rate action to rounding off, and the other on the stance, which in a sense, binds future policy action to a pre - committed direction. likewise, in a situation in which the central bank prefers to be accommodative but not overly so, it could announce a cut in the policy rate by 35 basis points if it has judged that the standard 25 basis points is too little, but its multiple, i. e., 50 basis points is too much. this approach can also be useful when the central bank is on a tightening mode and potentially help avoid policy turnaround from forward guidance via stance too far into the future, which in a highly volatile global scenario, may not even be a year. i am articulating this idea not necessarily in search of a theory but in search of traction with domain experts and more particularly, with practitioner central bankers who face these dilemmas in their day - to - day lives. 8. at another level, a formidable challenge that emes will continue to face is the management of global spillovers. we live in a world of mobile capital flows where consequences of their arrivals, sudden stops and reversals are to be borne nationally. against this backdrop, a truly global financial safety net remains elusive. the strengthening of resources of the imf gets pushed out into time whenever we come together for spring or annual meetings. under these conditions, emes which are typically at the receiving end when global spillovers flare up, have no recourse but to build their own forex reserve buffers. paradoxically, the accumulation of reserves has become stigmatised, including with labels such as “ currency manipulation ”. as i see it, we may be unintentionally setting the stage for several eme currencies to break out and challenge the

shaktikanta das : global risks and policy challenges facing emerging market economies speech by mr shaktikanta das, governor of the reserve bank of india, at the event “ governor talks ” on the sidelines of the international monetary fund - world bank spring meetings 2019, washington dc, 12 april 2019. * * * thank you for inviting me to this forum. i intend to cover some of the global risks and policy challenges from the perspective of emerging market economies ( emes ). we are aware that most emes have emerged more resilient than before from a turbulent 2018. for the greater part of 2018, the emes faced a wave of global spillover risks leading to capital outflows, currency and asset price volatility and tightened financial conditions. these developments posed risks to growth and inflation. strong fundamentals, forex reserve buffers, capital in banking systems and prudent macroeconomic policies, however, enabled these economies to absorb global spillovers. yet, as agustin carstens and hyun song shin soberingly point out, “ emes aren ’ t out of the woods yet ”. 1 global risks let me highlight three major risks confronting emes in 2019. 2. the biggest risk facing these economies is the growing evidence that global growth and trade is weakening. unsettled trade tensions and developments around brexit are imparting further downside risks to the outlook. there is considerable uncertainty as to whether this weakness is temporary or the beginning of a recession in advanced economies. this uncertainty also seems to be reflected in several downward revisions to the 2019 global growth forecast by the imf. moreover, central banks across the world are stepping back from tightening monetary policy and some of them are promoting easier lending conditions. in some economies, fiscal stimuli are being used to support growth. 3. the second risk is that emes remain vulnerable to financial market volatility as the experience of 2018 has shown. the risk of sudden stops and reversals of capital flows has increased. consequent external financing gaps and currency depreciations could undermine the outlook for growth and macroeconomic stability for these economies, just when global growth had begun to show signs of a synchronised revival a decade after the global financial crisis. furthermore, adverse financial conditions could aggravate existing stress in the balance sheets of lending institutions in some emes and stretch their capital requirements. 4. the third risk to emes is the high volatility in international oil prices. for