the lender - of - the last resort. this unique combination of responsibilities for macroprudential regulation and microprudential supervision, together with an implicit mandate for systemic oversight has allowed the reserve bank to exploit the synergies across various dimensions. the micro - level information coming from supervision of individual institutions has been a valuable input for shaping the macro perspective. on the other hand, the broad understanding from bis central bankers ’ speeches macroprudential regulation has been effective in instituting prudential safeguards at the micro institution level. 48. financial stability is explicitly entering the objective function of central banks postcrisis. in the reserve bank though, we had all along pursued financial stability as an important objective. indeed, one of the main reasons the impact of the crisis on india has been blunted is because the reserve bank tightened the provisioning norms and risk weights for sub - sectors that experienced rapid credit growth in the years before the crisis such as real estate and consumer credit. 49. in india, there are other market regulators besides the reserve bank such as the securities and exchange board of india ( sebi ), the insurance regulatory and development authority ( irda ) and the pension funds regulatory and developmental authority ( pfrda ) who contribute to the building block for financial stability. nevertheless the reserve bank has played an apex role by tradition and by the fact that it regulates banks in a financial system that is bank - dominated. the channels of interconnection between banks and other financial sector entities are within the regulatory perimeter of the reserve bank. 50. though the indian financial system weathered the global financial crisis relatively unscathed, there was enhanced focus on the regulation of financial system in india too in the wake of the global financial crisis. while the post - crisis debate in most countries was on the reform of the regulatory architecture, and what responsibilities to entrust to the central bank, the focus in india was on coordination amongst regulators. with a view to establishing a body to institutionalise and strengthen the mechanism for maintaining financial stability, financial sector development and inter - regulatory coordination, in december 2010, the government constituted the financial stability and development council ( fsdc ) to be chaired by the finance minister. the fsdc is to be assisted by a sub - committee to be chaired by the governor, rbi. this sub - committee has replaced the erstwhile high level coordination committee on financial markets ( hlccfm ) under the chairmanship of governor, rbi. while

they have to give people the opportunity to make the most of globalisation and technological advances and offer them employment prospects. the framework of monetary union needs to be designed in such a way that actions and liability for their consequences are aligned. 4. the financial crisis has demonstrated just how dangerous it can be if regulation of the financial markets is insufficient and loses sight of the principle of liability. thanks to fundamental reforms, the global financial system is now more robust. given the many 12 / 13 bis central bankers'speeches possible causes of a crisis, a focus on individual agents and markets falls far too short of the mark. it is essential to increase the resilience of the financial system as a whole. this should stop a crisis from developing into a systemic problem and endangering the functioning of the entire financial system. it would be a mistake to turn back the clock on regulation. in his book “ a short history of financial euphoria ", the harvard economist john kenneth galbraith, who died in 2006, lamented the “... extreme brevity of the financial memory, ” adding that “ in consequence, financial disaster is quickly forgotten. ” he believed that the world of finance was one of the few fields of human endeavour in which history counted for so little. ten years on from the outbreak of the subprime crisis and with a decade of crisis behind us especially here in the euro area - i don ’ t think we can yet talk about the crisis having been forgotten ; most people ’ s memories are not that bad. but i see a certain danger that lessons learned from the crisis may be increasingly thrown to the winds. that makes it all the more important not to put the crisis to the back of our minds or postpone the necessary consequences. but you of all people, about to embark on your working lives - and maybe some of you will choose to work in the “ world of money ” – should take heed. maybe some of you know what mark twain said about young people. “ we love the young, with their fresh ideas, just as long as these ideas are the same as ours. " thank you for your attention. i look forward to our discussions. 13 / 13 bis central bankers'speeches