are not ignored in the overdrive for financial stability. in india, the newly created fsdc has included financial bis central bankers ’ speeches literacy and inclusion in its mandate apart from those of macroprudential and financial stability responsibilities. against this backdrop, let me now introduce to you the format of the conference. we will cover the conference theme in two special talks and two technical sessions. we begin with the key note address by our governor dr. subbarao followed by presentation by two guest speakers, mr. jaime caruana, general manager, bank for international settlements and dr. y. v. reddy, former governor, reserve bank of india. then we move on to the presentation of papers and discussions where participants from fellow saarc member countries shall share their country experience on financial stability. it will be interesting to notice the differences / similarities in mandates, powers and accountability arrangements that are needed in different circumstances. for convenience, we have spread the discussions over two technical sessions, with a lunch break in between. this will be followed up with a panel discussion of governors, dealing with future challenges. the panel discussion will be moderated by mr. t. n. ninan, president of editors ’ guild of india. friends and colleagues, i trust we will have fruitful discussions during the day that will set the outline of our reaction function to the global developments in financial stability. with these words, i once again welcome you all to the conference. i wish you all a pleasant stay in kumarakom. this is one of the premier tourist locations in the country, combining aesthetic appeal with the pursuit of ecological sustainability, which is an apt metaphor for the issues and concerns that we will talk about during the rest of the day. bis central bankers ’ speeches

subir gokarn : financial stability welcome remarks by dr subir gokarn, deputy governor of the reserve bank of india, at the saarcfinance governors ’ symposium, kumarakom, kerala, 10 june 2011. * * * governor dr. subbarao, distinguished governors, dr. reddy, mr. caruana, mr. ninan, mrs. thorat, deputy governors, our guests from saarc central banks and friends. on behalf of the reserve bank of india, i extend a warm welcome to you all to the saarcfinance governor ’ s symposium 2011 on the theme of financial stability. just to refresh your memories, the last governors symposium organized by us under dr. reddy was in 2005 at mumbai which dealt with the theme of “ communications policy of central banks ”. financial stability is indeed a most appropriate theme for this meeting. the recent financial crisis also termed as “ the great recession ” clearly brought financial stability to the centrestage of public policymaking. the global financial crisis that swept the economic and financial systems across the world during the last three years has shaken our beliefs in some near truths. one, it has questioned the premise that price stability and financial stability are complementary. rather financial stability can be jeopardized even in an environment of price stability and macroeconomic stability. two, it is now impossible to imagine of sustained growth without financial stability. any disruption in the financial system anywhere in the world has the potential of affecting the real economy not only in that country but also elsewhere. we have seen that domestic and global financial stability are not mutually exclusive domains. with increasing financial globalization, there was a growing realisation about this, but the extent of transmission of disruptions during the recent financial turmoil through different channels, namely finance, trade and confidence channel was unthinkable before the crisis. it also came as an unpleasant revelation that even those countries which had not contributed to the immediate causes of the crisis had to bear the brunt of an unwholesome international financial climate. hence, domestic financial stability cannot become a realistic goal in the absence of a conducive global environment. three, the two - speed recovery, accompanied by a widening of global economic imbalances is at the centre of a new configuration of risks. these are visible on a variety of fronts – sovereign debt risks, financial fragility, the search for yield, and related stresses in emerging - market economies and foreign exchange markets. hence