indeed, if anything, given the tremendous volumes and liquidity of credit derivatives in general and of cdss ( both single - names and indices - based ), it would be more market - price discovery - driven for banks and supervisors to rely on prices backed out from these. indeed, cdss price credit risks almost on real - time basis as much as us treasury, foreign exchange, stock and commodities, markets do. credit rating agencies, in comparison, are much more lagged. significantly, as if to redeem their lost credibility and reputation, all the three rating agencies viz., fitch, standard & poor's and moody's, have now started a new service which provide implied credit ratings backed out / derived from cdss spreads! in view of the foregoing, there is a very strong case for kick starting a full fledged cdss market in india. the popular refrain that the recent global financial crisis was caused or exacerbated by cdss is again a myth in that cdss which are simple plain - vanilla off - balance - sheet / non - fund based derivatives, were confused with the cdos ( collateralized debt obligations ) which are on - balance - sheet and funded securitized structured credit products. it was securitization / re - securitisation, involving cdos, that played a seminal role in the crisis and no way the cdss. in fact, it is also a myth that securitization through cdos was an originate - to - distribute model ; rather, really speaking, it was an originate - to - distribute - back - to - originators model! this is because almost all cdos originated came back to sit on the sivs / conduits sponsored by originating banks themselves! besides, for all the overdone fears about systemic risks from the so called unregulated otc cdss markets, remarkably orderly and non - disruptive auction - based settlement of cdss claims in respect of cdss written on lehman bros., icelandic banks, fannie mae and freddie mac incontrovertibly attested to the resilience of cdss markets! indeed, if anything, cdss can be an effective and neat answer, and substitute, for cdos / securitization as it is less messy, more transparent and easily monitorable. interestingly, the new york fed led initiative to improve the otc cdss markets seeks to replicate our ccil - model, where although otc

. so, i wanted to project the reserve bank as an institution concerned with the common people and not just financial markets and financial institutions. keeping in view the need for continuity with change as appropriate to evolving circumstances, we in the rbi pursued five broad policy directions. first, reforms in monetary management consistent with global developments ; second, alignment of bank regulation with global standards ; third, improving legal and institutional infrastructure to enable a modern financial system, in particular in the payments system ; fourth, harmonising as far as possible, developmental objectives with those of stability in consultation with government, and ; fifth, exploring ways in which the financial sector could better serve ordinary people. i emphasised the fifth aspect, that finance should serve ordinary people, as opposed to making the assumption that the development of the financial sector by itself will contribute to economic development and welfare. some initiatives, particularly those relating to financial inclusion in india since 2003, reflect this orientation towards the common people. financial inclusion, thus, was not designed as a programme in isolation, but as a part of the overall strategy in bis central bankers ’ speeches regard to the role of the central bank, as warranted by the indian context of inadequate access to essential financial services. i was acutely aware, having been a deputy governor for six years, that the needs of the common person were not served well enough by the financial sector, despite all the investment, innovation and strengthening of existing institutions in the financial system, particularly banks. so, while pursuing the reform agenda already set, and in parallel, i put the focus on serving the needs of ordinary people in their interactions with the banking system. in doing this, i realised that our efforts were addressed to meeting the needs of those who already had links to banks. what about the rest, who actually were far more in number than those with links to banks? so, the reform agenda provided for improvements in the way that the financial sector served ordinary people better and ensuring that it would reach out to all. my assessment of the common person ’ s requirements at that time was as follows : what do ordinary people in india, at this juncture want most from us, the central bank? first and foremost, a safe place to keep their cash especially for poor women who have to keep their earnings out of the reach of their drunken husbands. second, mechanisms for consumption - smoothing since 90 % of the population is employed in the unorganised sector with seasonal or uncertain income flows. third, remittances to families