to be shared raises both intellectual and practical challenges. the intellectual challenge is to build a better understanding of the forces driving capital flows, what type of policy instruments, including capital controls, work and in what situations. the practical challenge is the need to reach a shared understanding on an organizing framework for cross border spillovers of domestic policies in capital - originating countries, and the gamut of policy responses by capital receiving countries. 9. managing capital flows involves two important things. first, we need to make a judgment on how important the externalities are. and, second, we need to make an objective assessment of what combinations of policies may be used to minimize their impact. now that it is broadly accepted that there could be circumstances in which controls can be a legitimate component of the policy response to surges in capital flows, policymakers must have the flexibility, and discretion, to adopt macroeconomic, prudential and capital account management policies. importantly, they should be able to do so without a sense of stigma attached to particular instruments. framework for the adjustment process 10. let me now move on to the third issue which is the framework for the adjustment process to secure and preserve global financial stability. the adjustment process should ensure that individual actions of countries add up to a coherent path forward. i want to emphasise two aspects of this. first, the imf ’ s surveillance function is critical – it assumes a vital, pre - emptive role in preserving global and national stability. the forthcoming triennial surveillance review provides an opportunity to take stock of the steps taken and to assess recent experience, including the adequacy of the legal framework for surveillance. second, reserve accumulation has to be viewed in the context of economic growth and development. the insurance that reserves provide against sudden stops and reversals of capital flows far outweigh the opportunity costs of holding reserves. the experience of the crisis has amply demonstrated this. what constitutes an adequate level of reserves is a country - specific question, involving a judgment based on practical experience. clearly, there can be no “ one - approach - fits all ” to such assessments. bis central bankers ’ speeches global reserve currency 11. my fourth point relates to a global reserve currency. the recent crisis has brought home the complex challenges arising from the world having a single reserve currency. in the ongoing search for solutions, one option is to have a menu of alternative reserve currencies which fulfill the required criteria – full convertibility ; the exchange rate determined by market fundamentals

have realized the value proposition and the only sustainable business model is where these stakeholders work together to deliver true value to customers and effectively share the costs saved and new revenues generated. hence, it is imperative that all the three while being cognizant of their strengths, do not lose sight of their weakness and find ways to integrate their offerings without losing their individuality. the broad regulatory approach of rbi has been to permit such entities to provide payment services that are fee based without access to funds of the customers. customer service issues have been pain points in efficient delivery of services. the use of agent networks and the use of sms channel mainly for transactions have associated customer service issues. 11. in particular, i would like to mention some of the important measures taken by the rbi aimed at customer protection mandating online alerts for all card - based transactions irrespective of the value or the delivery channel. this would include transactions effected through the mobile wallets. mandating a second factor of authentication for all card - not - present transactions based on information not available on the card. m - pin, which is mandatory, serves as the second factor authentication for mobile banking transactions. in case of prepaid instruments including mobile wallets issued by non - banks, an escrow arrangement whereby the issuers do not have access to the funds collected from the purchasers of such instruments. this also ensures that the amount held in the escrow account is protected from bankruptcy of the issuer and the card holder has prior claim over other creditors. payment system operators have been prohibited from entering into any agreement with an agent with an “ exclusivity ” clause preventing the agent from doing a similar business with another payment system operator. mandating minimum security standards for mobile transactions one of which is to insist on end to end encryption of messages except for small value transactions. f. how does india envision the goal of financial inclusion and inclusive growth? there are over 600 million active wireless telephone subscribers in india. reserve bank has acknowledged the importance of mobile banking channel as a critical element to achieving inclusive growth in india and has been taking several important steps, the recent being enabling the mobile companies to partner with banks as business correspondents. the twin challenge in our country would be to succeed in reducing the use of cash while encouraging the spread and use of mobile wallet and mobile banking to reap the full benefits of this ubiquitous product. the stance adopted by rbi is to restrict deposit taking activity to banks while promoting the branchless banking