became focused on “ maintaining price stability ”. after the ﬁnancial crisis, the financial stability act of 2013 prominently provided for the bundesbank to contribute to safeguarding ﬁnancial stability. while central banks play an important role in ensuring ﬁnancial stability through macroprudential policies, they do not act independently. the bundesbank and the federal financial supervisory authority ( bundesanstalt fur finanzdienstleistungsaufsicht, baﬁn ) are members of the financial stability committee ( ausschuss fur finanzstabilitat ), the main policy body responsible for macroprudential surveillance. the committee is chaired by the ministry of finance. [ 2 ] the committee evaluates the stability of the german ﬁnancial system, submits an annual report to the german bundestag, and it can issue warnings and recommendations. the bundesbank provides analytical inputs for the discussions. macroprudential policy is particularly important in a monetary union where joint responsibility for monetary policy coincides with national responsibility for key policy areas affecting ﬁnancial stability. hence, mechanisms are needed which prevent the build - up of excessive levels of private or public debt. recognizing the importance of sound ﬁscal positions for a monetary union, the stability and growth pact focuses on mechanisms to contain the build - up of excessive levels of public debt at the level of individual member states. the european sovereign debt crisis has been a painful reminder of how important incentives to maintain sound public ﬁnances are. but it has also shown that looking at the current levels of public debt might be [UNK]. in the wake of banking crises, and without credible mechanisms to restructure excessive private debt, governments might be forced to intervene. private debt may then turn into public debt. financial stability has thus been established as a new policy ﬁeld in order to address the build - up of excessive levels of private debt. macroprudential policy aims at increasing the resilience of the ﬁnancial system, making systemic ﬁnancial crisis that may, ultimately, result from excessive surges in debt less likely and severe. in addition, credible resolution regimes for banks are needed to reduce implicit government guarantees and to prevent risks from being shifted from the private to the public sector in times of crisis. against this background, this paper makes three key points : first, monitoring the build - up of unsustainable debt levels requires taking the real economy into account. weaker economic growth imp

. have been enabled to provide credit enhancement and for this guarantee fees up to 200 bps could be paid by the indian issuers. some international and domestic financial institutions have in fact shown some interest in this regard and these initiatives could be taken forward. smooth sovereign yield curve the absence of a risk - free term structure of interest rates makes it difficult to price credit risk of instruments issued by the private sector and quasi - sovereign. in the indian context, however, with issuance of government bonds for different maturities up to 30 years the sovereign risk free curve does exists. there is, however, an issue relating to having a smooth yield as also almost flat nature of the curve beyond 10 years since trading is confined to a few points, particularly in the 10 to 14 year segment. fixed income and money market derivatives association ( fimmda ) has, however, taken steps to create a yield curve by taking available trade data from different points and applying the cubic spline interpolation model for smoothening the yield curve. in addition to passive consolidation being adopted by the reserve bank over the years, it is, in consultation with the government, considering the process for active consolidation involving buybacks / switch operations besides regular issuances at different points of the curve. enhancing transparency it is desirable that the level of information dissemination available in g - sec and money market is replicated in corporate debt market. this is required as there is paucity of information on individual issuances as there is no comprehensive database ( though one private firm collects quite a bit of data ) which constrains policy - making. the proposed measures of sebi to simplify the disclosure norms for debt listing will definitely improve the situation. however, there is an urgent need to design and create such centralised database with more details like issue size, option availability, rating, etc. for better market transparency and improve regulation. it may also be noted that there is also a bias towards issuance of bonds through private placement which is not a very transparent method and thus, is impacting the secondary market liquidity in corporate debt. hence, there is need to encourage public issuance of bonds. relaxing investment restrictions keeping in view the long term funding requirements of infrastructure sector, insurance, provident funds ( pfs ) and pension companies are best suited for making investment in such bonds. hence, there is a need to revisit the investment guidelines of such institutional investors since the existing mandates of most of these institutions do not permit large investment