interest rate smoothing. in the second stage, we have simply used the original taylor rule assuming inflation and output gap coefficients at 0. 5 each. our empirical analysis is based on quarterly observations from 2000 – 01 : q1 to 2012 – 13 : q3 with average overnight call money rate as the measure of short - term interest rate. the results suggest greater weight on inflation, evident from the level of statistical significance and correctness of the sign of the parameters, in the standard formulation. but interest smoothing becomes dominant in the alternative formulation alongside a significant weight on inflation. in this formulation, although the output gap has the expected sign, it turns out to be statistically insignificant. however, the explanatory power of the equation improves substantially as compared with the standard formulation ( table 2 ). table 2 : parameter estimates of taylor rule equation ρ α r * β γ r2 1. estimated standard taylor rule - - 4. 68 ( 0. 00 ) 0. 93 0. 25 ( 0. 02 ) – 0. 26 ( 0. 05 ) 0. 21 0. 75 ( 0. 00 ) 1. 92 ( 0. 34 ) 0. 52 0. 72 ( 0. 06 ) 0. 23 ( 0. 67 ) 0. 66 2. estimated taylor rule with smoothing assumptions : ( i ) period of observations : q1 : 2000 – 01 to q3 : 2012 – 13. ( ii ) desired inflation rate ( π * ) = 5 %. ( iii ) potential output estimated by hp filter. ( iv ) r * = α + ( β - 1 ) πt * for given values of desired level of inflation at πt *. note : figures in bracket indicate p - values. given the estimated neutral rate of interest, desirable inflation rate and potential output growth, we have calculated the level of interest rate implied by the standard taylor rule with equal weight of 0. 5 to both inflation and output gap. the trend in estimated interest rate implied by taylor rule showed periods of significant departure from the actual call money rate trajectory. but the deviation was more pronounced in the post crisis period which has since been narrowed in 2012 – 13. interestingly, there was close correspondence between the bis central bankers ’ speeches implied taylor rule interest rate and actual overnight call money interest rates during the high growth phase of 2003 – 08 ( chart 5 ). chart 5 : greater divergence in interest rate post - crisis we also compare another measure of gap : interest rate gap as the difference

fintech as a force multiplier ( address by shri shaktikanta das, governor, reserve bank of india at the global fintech festival on september 20, 2022, mumbai ) i am delighted to be here today in the third edition of the global fintech festival ( gff ). i would like to congratulate the organisers – the national payments corporation of india ( npci ), the fintech convergence council ( fcc ) and the payment council of india ( pci ) for organising this event. the theme of the event – creating a sustainable financial world - is very relevant in current times. 2. in recent years, india has witnessed rapid progress in the financial services sector. technology, innovation and fintech are working in tandem and contributing to the dynamism of this sector. in our journey towards higher levels of sustainable development and financial inclusion, these forces have morphed into force multipliers. we have leveraged a lot on these forces ; we need to leverage even more. 3. let me now get down to the specifics. there has been exponential growth of technological enablers in india. telecom penetration, availability of internet services, adoption of technology in facilitating access to credit, more efficient payment systems and deepening of financial inclusion have made significant progress and are continuing to progress further. 4. the total number of broadband internet users in india stood at 80. 7 crore at the end of july 2022 1. with more than 46. 5 crore jan dhan accounts, 134 crore aadhaar enrolments and 120 crore mobile 1 telecom regulatory authority of india ( trai ). connections, new opportunities are opening up for implementing innovative ways of integrating and delivering services. this can be gauged from the emergence of 100 unicorns in the country with record 44 unicorns established last year 2. 5. for any society aspiring to grow faster, its financial institutions must be robust, efficient and accessible. the next decade of finance will be more focussed on two central themes : ( i ) sustainable development and ( ii ) technology led innovations transforming the lives of common people. therefore, sustainable development and ensuring a resilient financial system form the fulcrum for our policy architecture. 6. as we have all witnessed, technology has been central to the resilience in the face of the covid - 19 pandemic, particularly during the lockdowns imposed around the world. it has also been central to our response to the crisis and