##fold in a manner which will prove that the mpc ’ s decision was right. but that is not the point i am trying to make and only time will tell how the situation evolves. when we took the pause, the mpc very clearly recognised that monetary space is available, and it will use this space as per requirement, keeping in mind the incoming data regarding inflation and growth. this can be construed as an example of forward guidance wherein the reasons for the pause have been very elaborately explained in the mpc resolution and in the statement which i made during the press conference. it is available on the rbi website. in our decision to take a pause, while we have said that there is space for further monetary policy action, we have very carefully and very definitively also said that the timing will have to be decided in a manner that its impact is optimum and maximised. 33. we have, in fact, in other policy measures also, tried to bring about a lot of transparency, showing our focus on communication. to explain the power of communication, let me mention the 2008 global financial crisis and the expansionary policy that the us fed adopted at that time. the communication at that time was very powerful ; therefore, it was accepted by the international markets and the analysts. everybody understood exactly what the fed was going to do. in 2013, during the so - called taper tantrum, the us fed ’ s communication was not as powerful – a mere mention that they are perhaps going to roll back or unwind the expansionary policy – created a huge havoc and volatility in the international financial markets. communication, therefore, is a powerful tool. any decision that is taken by the central bank has to be backed by communication. of course, communication should be backed by action and it should never be empty words. 6 / 7 bis central bankers'speeches conclusion 34. let me conclude by saying that in a complex and interconnected economy such as india, challenges emanate from the spheres of monetary policy, regulation and supervision of financial markets as well as detection of frauds, risk management functions and internal control systems of banks and non - banks, amongst others. 35. consequently, there is never a dull moment in the central bank. it is always full of challenges ; what is important is that we should respond to these in time. recently, an old timer in mumbai told me that you have winds blowing from two different directions in the top floors of the reserve

conference. the way it is relevant will depend on your engagement with the market. the guidelines for appropriate conduct are relevant for the buy side as well as the sell side. on the buy side it will also help to give you guidance as to what you can reasonably expect from your counterparty as you transact your fx business. what this means in practice is that the steps different market participants take to align their activities with the principles of the code will necessarily reflect the size, complexity, type and extent of their engagement with the fx market. as i mentioned earlier, the first phase of the code was released in may 2016. it covers areas such as ethics, information sharing, aspects of execution and confirmation and settlement. the second phase covers further aspects of execution including e - trading and platforms, prime brokerage, as well as governance, and risk management and compliance. we have provided market participants with a number of opportunities to comment on the code, in addition to receiving the direct input of the market participants group led by david puth. over the past few months, drafts of the full text of the code have been distributed to market participants for their review, principally through the various fxcs, but also through other industry associations to ensure all perspectives are appropriately reflected in the code. through this process, quite a few thousand comments were received. in my view, the text of the code provides the best and most appropriate guidance we could give, given the sometimes wide range of feedback received, particularly on those small number of issues which are most controversial in the market. the most obvious example of this is ‘ last look ’. this issue has generated considerable passionate discussion. i would expect that discussion to continue after the release of the code in may and that the code might evolve as a function of that discussion. i would like to make the point that if market participants think it would be preferable for the code to have gone further, they are welcome to go down that path in their operations. on the other hand, it would not be desirable for the converse to occur, namely for market participants ’ practices to fall short of the principles described in the code. that said, i think it is good outcome of the process that we were able to distil the points of contention down to a small number of ( not insignificant ) issues. outside of a small number of contentious areas, the feedback was reflective of a widely held consensus. market participants have recognised the code ’ s aim of helping move the fx market to a