2008 – 09 ( chart 6 ). subbarao, d. ( 2009 ), “ impact of the global financial crisis on india : collateral damage and response ”, speech delivered at the symposium on “ the global economic crisis and challenges for the asian economy in a changing world ” organised by the institute for international monetary affairs, tokyo, february 18. bis central bankers ’ speeches on the back of substantial monetary and fiscal stimulus, growth bounced back quickly. however, inflation also picked up. consequently, the policy focus shifted to exit from accommodative monetary policy in a calibrated manner starting in october 2009. to begin with all special liquidity measures were withdrawn which was followed by hikes in policy rate. as the real policy rate turned positive it started to have an impact on inflation. going into the financial year 2012 – 13, growth declined and headline wpi inflation showed a clear sign of moderation. this prompted the reserve bank to reduce the policy rate ( chart 7 ). bis central bankers ’ speeches as the economic conditions appeared to be stabilising, volatility in the financial market returned following the announcement in may 2013 of the fed ’ s intention of likely tapering of qe. this prompted the reserve bank to resort to somewhat unconventional monetary policy measures besides drawing down of foreign exchange reserves to meet the immediate shortfall ( chart 8 ). let me give you the flavour of key measures. • in terms of monetary policy, the upper bound of the policy rate corridor ( i. e., msf rate ) was raised by 200 basis points and the quantity of central bank liquidity available through the laf window was restrained. this had the desired effect of tightening the monetary conditions and raising the effective policy rate sharply to the msf rate. • in order to signal that the above measure is temporary so that the interest rates at the longer end do not harden a form of operation twist was tried by conducting outright omo purchase of government securities alongside sale of short - term government cash management bills. this inverted the yield curve, though accompanied by some increase in long - term rates. • with a view to containing the current account deficit ( cad ) on the balance of payments ( bop ), gold imports were restricted. • the non - resident deposit schemes and banks ’ borrowing abroad were further liberalised with incentives for swapping these inflows directly with the reserve bank. this substantially augmented foreign exchange reserves despite some outflow on account of directly meeting the foreign exchange requirement of

foreign exchange committees have committed to developing a set of global high - level principles on fx trading. closer to home, there have also been a number of initiatives aimed at improving culture and behaviour at a firm and individual level, including the uk parliamentary commission on bis central bankers ’ speeches banking standards, the banking standards review council ( bsrc ), and widespread efforts by individual firms to strengthen internal controls. the introduction of malus, bonus clawback and the senior managers and certification regime in the uk will strengthen accountability as well. is it enough? this range of initiatives should make markets more fair and effective. but we need to make sure that taken together they add up to a comprehensive solution to fix the barrel and to get rid of the bad apples. a primary aim of our review is to take stock, and ask whether the extent of regulatory, organisational and technological change since the crisis will be sufficient to ensure ficc markets are fair and effective in the future. over the next three months, we want to hear from those directly active in those markets, from the companies and households who rely on them, from academics, and from public authorities globally. our approach will be explicitly forward looking. and we have no hidden agenda. where we judge changes that are already under way to regulation, firm - level controls, market structure and technology are sufficient to restore fairness and effectiveness, we will say so. where we do not, we will make recommendations on the most important priorities for change. a defining characteristic of our review is a recognition that improving fairness and effectiveness is a shared responsibility between individuals, firms, the market as a whole and the public authorities. as i said at the outset, we believe that markets – when they work properly – are the best source of dynamism, prosperity and progress. so i expect that a key part of the review ’ s final recommendations will consist of firm - and market - led initiatives. with that in mind, we will draw on input from an independent panel of senior market practitioners, chaired by elizabeth corley of allianz global investors, and bringing together senior representatives of internationally active market participants and investors, market infrastructure providers, major corporate users of financial markets, and independent members. the final recommendations of the review will be made by me and my co - chairs with the support of the excellent team we have assembled. but we hope the panel will help launch and take forward those parts of the final recommendations requiring active market ownership. where firm - led solutions are not enough to