a lot in this regard. we have to strengthen the legal framework as applicable to entities operating in the city and their counterparties in the domestic sector. it is possible that many business entities that can potentially relocate to gift city are waiting for this framework to be put in place. 16. an ifsc should have a legal structure that is sufficiently supportive of the swift resolution of conflicts and disputes arising from the settlement / enforcement of complex international financial contracts. the contract should be of international standard and enforceable in the court of law and preferably similar to isda documentation. 17. the existing laws governing financial contracts in india should be reviewed and gaps addressed. based on the review, a world class legal framework for financial contracts in gift could be enabled, either by appropriately amending the existing laws governing financial contracts or enacting a fresh law. either way, this should be expedited, may be by constituting a high level working group to address this gap in mission mode. 18. in addition, a unified financial regulatory framework providing for a single regulator for gift city could contribute to better regulation and supervision of the financial entities in the city. while individual regulators can supervise the entities initially when the size of the business is small, a unified regulator would be necessary to pay undivided attention to the ifsc. work on the design of such a framework should begin soon so as to be able to implement this in time. 19. in conclusion, fiscal incentives and other leeway will take gift forward only so far, work in areas that i have just suggested is essential for fully harnessing the ifsc ’ s business potential. 3 / 3 bis central bankers'speeches

and build upon what we have attained. our credibility for sound macroeconomic management depends on it. as backdrop, there are two important transitions underway in the two largest economies. one is the realignment of fiscal, monetary and trade policies in the us, which has already imparted considerable financial volatility in the global economy in the last two months. even nafta is not sacrosanct, us trade partners, especially emerging markets, stand forewarned. and all this is even before the new us administration takes office later this month. the other transition, of course, is the rebalancing of china ’ s growth drivers from investment and exports to domestic consumption of goods & services. one of these transitions is welcome, the other not so. 1 / 3 bis central bankers'speeches 8. for us, in india, good policy housekeeping should be the cornerstone. it is easy and quick to fritter away gains regarding macroeconomic stability. but hard and slow to regain them. what have we learnt about the important policy attributes in this context? 9. firstly, a monetary policy framework backed by legislation. the rbi now has a notified target for inflation of 4 percent, which a six - member monetary policy committee has been enjoined and tasked to realise. we have to ensure that this objective is secured on a durable basis given the progress already made. in addition to monetary policy, the gain on reducing inflation has been, in no small part, due to supportive policies of the government, especially the proactive management of the food economy since 2014. 10. low and stable inflation is an essential prerequisite for having a meaningful interest rate structure or regime whereby decisions by savers and investors help to achieve maximal allocative efficiency in an economy whose investment rate has to increase for better growth outcomes. concomitantly, we have to continue to press ahead for a more fluid, smooth transmission of monetary policy, as also enhance the formulaic linkage between changes in policy rates and other rates, including administered ones. the perception is that some of these adjustments are presently ad hoc. automaticity will help to impart more predictability and possibly make for better long - term decisions by economic agents. 11. in addition, while some government guarantees and limited subventions can help, steep interest rate subventions and large credit guarantees also impede optimal allocation of financial resources and increases moral hazard. the mandates for these have to be narrow, and thus perforce