and managing their currency risks. given the growing size of india ’ s presence in international trade and finance, more of course needs to be done to make the market broader, deeper and more vibrant. i have flagged certain proximate concerns and issues, although the list is not exhaustive, for this gathering to ponder over i am sure a congregation of this nature with a number of domain experts participating in the business sessions would also discuss some of these issues of proximate concerns. these and other strategic issues deliberated in such a forum would go a long way in delineating the future trajectory of development and regulation of the foreign exchange market of an aspiring emde like ours. i wish the conference a great success. thank you for your attention. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

##a. fortunately, the spillover effect is beginning to be recognized now. in its latest monetary policy statement, the federal reserve has stated that their assessment of economic conditions will take into account a wide range of information, including international developments. the president of the european central bank, too, acknowledged this when he said that the european central bank was keeping an eye on risks stemming from volatility in emerging markets. 31. post 2008 global financial crisis, central banks have sought to enhance transparency in their policy thinking and action through communication. ‘ forward guidance ’ is now a part of monetary policy tools of many central banks. there has been a sea change in the way central banks view the role of communications in monetary policy ( paul jenkins, 2001 ). 6 the challenge in central bank communication lies in how best they communicate in a language that provides clarity and not further confusion to the public discourse. the federal reserve, in its last couple of meetings of 2014, had indicated that it would be “ patient ” before raising the interest rates. this was seen as a way of preparing the markets for gradual reversal of low - interest rate and accommodative cycle and prevent sudden - shocks in the markets. the markets are, however, divided in their interpretation of the term “ patient ” and its qualification or elimination in the minutes of the next meeting. in other words, forward guidance is emerging as a challenge for the central banks viz - a - viz the markets as has been experienced by the bank of england and now possibly, by the federal reserve. thus, the communication of policy stance by the central banks of the advanced economies can be a cause of market volatilities and may have spillover impact on emdes like india. e. india ’ s external sector vulnerabilities 32. let me now briefly touch upon india ’ s external sector vulnerabilities now vis - a - vis the 1990 – 91 when the bop crisis led to paradigm shift in our macro - economic policy framework. communicating canadian monetary policy : towards greater transparency : paul jenkins, deputy governor, bank of canada, may 2001. bis central bankers ’ speeches between 1990 – 91 and now, trade deficit has deteriorated peaking at 4. 8 at end - march 2013 but has recovered sharply to 1. 7 as at end - march 2014 ; expectation is that for the year ending march 2015 similar range of lower cad. invisibles have been very steady and have lent support to the current account. capital flows have not only financed cad but