addressed. in the context of ongoing reforms in the financial sector in india, the regulatory regime has also undergone certain fundamental changes. new regulators like those for the insurance sector and capital markets have been created. the focus of regulation has also changed. the issues of regulatory co - ordination do arise often. however, the changes in the regulatory regime, meant for greater efficiency, may, on occasion, contain the risk of being a source of instability. this leads us to the role of regulators in developing market - oriented financial system while maintaining the independence and credibility of the regulator. in india, this process involved development of technological and institutional infrastructure by the reserve bank of india, changing the interface with the market participants through consultations and communication - which was critical for mutual benefit. the relationship with the government - as the majority owner of the financial entities, as the ultimate risk - bearer in the system and as the sovereign in law making - is also changing in the new environment. in a way, in the development of a market - oriented financial system, the reserve bank of india is, what i may call, a “ nurturing ” regulator as well as an “ independent ” regulator. in the relationship with the government, the reserve bank of india emphasises : ( a ) autonomy in operations ; ( b ) harmony with the government policies, specially due to the continuing dense linkage between fiscal and financial sectors in india ; and ( c ) co - ordination with the government in bringing about structural changes, particularly in respect of public ownership and legislative framework. in this background, would a single regulator, other than the central bank help? will separating banking supervision from the central bank be of help? i would like to quote here professor charles goodhart ( 2000 ) : “ i doubt whether the pressures to establish a unified supervisory agency are quite as strong in most developing countries. ” he adds : “ for such reasons, i do not believe that the case for separation, which has become stronger in the developed countries, should be transposed also to the developing countries. ” i hope the views of professor goodhart in this regard, since he made the above comments at a memorial lecture in rbi, have not changed over the past three - four years. as a pragmatic measure, we have banking supervision under an independent board for financial supervision ( but within the rbi ) while some sort of co - ordination is sought to be achieved through a high level coordination committee on financial and capital markets, consisting of financial regulators and the ministry

index. php? q = node / 1263. stark, jurgen ( 2010 ), “ in search of a robust monetary policy framework ”, keynote speech at the 6th ecb central banking conference “ approaches to monetary policy revisited – lessons from the crisis ”, frankfurt am main, november 19. borio, c. ( 2009 ), “ implementing the macroprudential approach to financial regulation and supervision ”, banque de france financial stability review no. 13, 31 – 41. blinder, a. ( 2010 ), “ how central should the central bank be? ”, journal of economic literature, 48 ( 1 ), 123 – 133. danthine jean - pierre ( 2012 ), “ reconciling price and financial stability ”, speech at the university of zurich, zurich, january 24. mohanty deepak ( 2011 ), “ lessons for monetary policy from global financial crisis : an emerging market perspective ”, paper presented in the central banks conference of the bank of israel, jerusalem, rbi bulletin, april. bis central bankers ’ speeches stability has been important to policymaking, considering the greater incidence of financial crises in emes in the 20th century. moreover, many of them were also responsible for macroprudential regulation even though only a few of them directly derive it from the explicit mandate ( table 1 ). indeed, the resilience of the financial systems in the emerging markets during the recent global financial crisis owes to financial stability already being an important monetary policy objective ( de gregorio, 2011 ). 24 even as many emes formally adopted inflation targeting ( e. g., chile, brazil, south africa, indonesia, thailand and mexico ), in practice they followed a “ flexible inflation targeting ” framework, as discretion was used to respond to shocks and also to pursue other objectives. 25 emes which did not formally adopt inflation targeting ( e. g. china, nigeria, malaysia and india ) have price stability as one of the key objectives of monetary policy ( table 2 ). multiple instruments, including quantitative tools such as the cash reserve ratio, were used to moderate the pace of domestic credit growth as well as monetary impact of large capital inflows in china, india and russia. in the east asian emes, the importance of financial stability and the need to prevent financial imbalances by active use of macroprudential policy measures was emphasised after the asian crisis. accordingly, central banks were given either the sole or shared responsibility in pursuing