recurs in response to the fiscal problems within the euro - zone and china ’ s tightening of liquidity management. the world economic recovery stalls out amid a sharp run - up in international commodity prices including that of oil. the recovery in business activity is constrained owing to increased failures of domestic smes. ii. future policy challenges going forward, economic policy needs to secure and enlarge a stable basis for counteracting the possible outbreak of a crisis on the domestic front, complementing the efforts to avoid the recurrence of a global financial crisis at an international level. 1. strengthening of international policy cooperation toward this end, strengthening international policy cooperation constitutes the priority task. the world economy has been recovering more rapidly than expected owing to the fact that international policy cooperation has been swiftly brought to bear against the global financial crisis. a great contribution to this has come from the soothing of market uncertainties by the delivery of a consistent message of recovery from the crisis by every country around the world and, in addition, from the forestalling of the leakage of the effects of independent policy implementation in open economies. in future, every country around the world needs to strengthen the basis for global financial stability still further through international cooperation. under the aegis of the bis, discussions on proposals for policy cooperation are now underway with the aim of reducing gaps in financial regulations among countries and the tendency of financial institutions to indulge in risk - taking behavior. standards for financial soundness including those relating to capital, leveraging and liquidity are being tightened with a major focus on systemically important financial institutions. korea proposed placing the construction of a global financial safety net on the official agenda at the last g20 global summit meeting. in regard to individual countries, the financial safety net now consists of the imf lending system ( fcl ), bilateral currency swaps and the expansion of the foreign exchange holdings. however, in actual fact, it is difficult for these arrangements to function in the envisaged manner because of problematic points such as the stigma effect and the expansion of global financial market imbalances. for the construction of an effective global financial safety net, it is considered appropriate to discuss these at the g20 level in view of the necessity of fine tuning conflicts of interest between the advanced countries and the newly emerging market countries with respect to international capital movements. the presentation of specific proposals is eagerly awaited at the forthcoming seoul summit in november. at the same time, korea is pushing energetically for financial cooperation and

trading. further, as pointed out by the scs / rcs, in terms of guidelines issued by sebi, high networth individuals ( hnis ) are already allowed to participate in the sr market as alternate investment funds ( aifs ) have been notified as qibs, eligible for investment in srs issued by scs / rcs. one possibility is that they may be allowed to participate directly in the sr market, as they have necessary risk capital and risk appetite. this measure may help widen investor base and infuse greater depth to the secondary market for srs. an active secondary market for srs will attract special situations funds and qibs to this market. reserve bank has already suggested to the government of india that section 7 of the sarfaesi act may be amended by giving power to rbi to specify the category of the investors from time to time in consultation with sebi. debt aggregation 35. while sale of npas by banks depend on various factors like security package available, best price, etc., and therefore many times sale with respect to debt of a single borrower to a single scs / rcs may not be possible, sale of entire debt of one borrower to single sc / rc would help in effective and efficient resolution. piece meal sale of an asset particularly with turn around potential by different lenders defeats the purpose itself as it results not only in delays but also pricing hiccups and derails resolution process. bis central bankers ’ speeches alternatively, scs / rcs may also need to evolve mechanism to coordinate in successful resolution of those assets, in the best interest of all stake holders. judicial delays 36. an important factor affecting recovery performance of scs / rcs is the delay in judicial process : be it under sarfaesi act or at the level of debt recovery tribunals. a fast and efficient judicial system is a sine qua non for effective resolution of npas. realising the importance of having a strong bankruptcy framework in improving the ease of doing business, government of india has constituted a bankruptcy law reforms committee to study the corporate bankruptcy legal framework in india. the committee has submitted an interim report in february 2015 for immediate action and its final report is expected to be submitted within 12 months, recommending a bankruptcy code. reserve bank expects that recommendations of the committee, when implemented, would result in significant improvement in the bankruptcy framework of the country and enable banks / scs / rcs to resolve their stressed assets in an