it is possible to charge less import duty when designated agencies import, to discourage the nri route. in any case, nominal import duty is a pre - condition for liberalised imports. incidentally, under the liberalised regime, the sale of gold by designated agencies has to be freely permitted to domestic jewellery units. also, the stipulation of payment of duty in foreign exchange may have to be dispensed with in view of the avoidable irritants, the undermining of domestic currency and market - determined exchange rate. second, impetus to active domestic trading in gold is a logical consequence of an ngp. currently, the industry is fragmented. it will be essential to tackle major operational issues required to give a fillip to the gold market, such as the development of refining capacity, accredition of refineries and the introduction of the system of hallmarking as a consumer protection and export promotion measure. further, serial number, fineness and assay mark of the melter and assayer should be found stamped on bars. we may have to allow foreign companies with expertise in this area to set up shop in india. the melters and refiners, both from within and outside india may have to be permitted based on net worth, turnover, etc. perhaps we have a lot of catching up to do. third, it may be necessary to recognise financing as an important policy component of developing the gold market. as would be explained later, the legal and institutional framework is available. finally, the development of gold banking will be derived from the policy stance. on this subject, i expect the deliberations in this conference to throw up some ideas. the role of the reserve bank of india central banks the world over have a special concern and role in gold economy. the rbi is no exception. broadly speaking, the role of the rbi spans five areas. first, and very obvious, is the management of gold reserves. since october 1990, the bank ’ s gold holdings have been valued on the basis of international market prices. we recognise the price risk on the gold holdings and have considered the use of gold options and futures to hedge our risk. however, the rbi act in its present form does not have enabling provisions. there is also a view that exemption notification by the government would be required under section 27 of the forward contracts ( regulations ) act to enable the rbi to enter into gold - currency swaps. second, the rbi had played an active part

policy. subsequently, prof. fischer extended his research to the role of policy in the context of rational expectations, stickiness in prices and indexation of wages. israel a brief comment on the bank of israel under governor fischer ’ s leaderships. israel came out of the crisis relatively unscathed, and the credit for that goes largely to stan. replying to a question on how that happened, he answered, and i quote, “ when the crisis came, we saw it approaching from afar in the form of currency appreciation, and we balanced this phenomenon with foreign exchange deals. when lehman brother collapsed, we decided it was the moment to cut interest rates. ” whoever said “ academics do not make good practitioners ”? in 2010, the bank of israel was ranked first among central banks for its efficient functioning, according to imd ’ s world competitiveness yearbook, yet another tribute to stan ’ s leadership and sagacity. in september 2009, the bank of israel was the first bank in the developed world to raise its interest rates demonstrating stan ’ s intellectual courage to be an outlier. in october of 2010, stan fischer was declared central bank governor of the year by the euromoney magazine. central bank lessons professor fischer will be speaking today on “ central bank lessons from the global crisis ”. that topic needs no explanation, but maybe it needs some context. when asked what he thought of the french revolution, mao zedong had famously replied – “ it is too early to tell ”. people who take a long view of history, like mao, take the position that it is just too soon to draw the lessons of the crisis. policy practitioners do not have the luxury of historians ; they have to respond to unfolding developments in real time, and incorporate the lessons of experience. there is another reason why it is not too soon to be talking about the lessons of the crisis ; indeed why we should be more activist in learning the lessons of the crisis. in their bis central bankers ’ speeches painstakingly researched book, “ this time is different : eight centuries of financial folly ”, kenneth rogoff and carmen reinhart show how over eight hundred years, all financial crises can be traced to the same fundamental causes as if we learnt nothing from one crisis to the next. each time, experts have chimed that “ this time is different ” claiming that the old rules do not apply and the new situation is dissimilar to the previous one. is this time really different for central banks?