have no idea how the banks ’ cost of funds comes down during festivals. you may choose to waive off processing fee, which is transparent, but how can the rates come down? similarly, there are several instances of levying charges without providing any additional services such as charges for non - maintenance of minimum balances, cancellation of demand drafts, prepayment penalties, intersol charges, etc. also, while penal interest is imposed on smaller customers if they fail to meet their payment obligations, in case of larger borrowers, interest concessions might be offered under restructuring arrangements. there are elements of discrimination in all the above situations, which must be addressed. let me emphasize that the bcsbi has an important role to play in removing these anomalies as it would not be appropriate to create regulatory prescriptions for all issues. banks also need to take initiatives on their own. implications for economic and social order 14. i would like to point out that there may be situations where the customer demands banks to act in a manner that would suit the customer, but could have adverse social or economic implications. in such cases, banks ’ internal processes should ensure that their frontline staff chooses the social and economic interests over customer demands. adherence to high standards of conduct by banks has important implications for ensuring maintenance of economic and social order. let me cite a recent instance, the expose by a media outfit on unethical practices at banks. our enquiries have revealed that there were transactional and market conduct issues which need immediate redressal. at the transactional level, instances bis central bankers ’ speeches of bank staff facilitating splitting of deposit transactions by customers for avoiding their reporting as ctrs / strs to the investigative agencies were also noticed. if these are not unfair and unethical practices then what is? these transactions may be beneficial to individuals but, eventually, they manifest in the form of societal cost. 15. let me highlight that unfair market conduct does not only mean being on the wrong side of the law or the regulations. what banks must consider is whether the transactions that they undertake or approve of are beneficial for the society as a whole. the delayering of transactions on behalf of customers so as to facilitate tax management ( or avoidance ) is an example where societal interests are subverted to suit customer requirements. likewise, how ethical is it to facilitate customers ’ transactions by allowing them to have several relationship / customer ids within the same branch / bank? 16. there may also be instances where

##6. section 6. see breitenfellner, a., r. holzmann, m. silgoner and t. zorner. 2022. quo vadis, productivity? oenb occasional paper 1. 1 – 72 ; holzmann, r. and m. t. valderrama. 2021. raising r * : why, how and if not now, when? suerf policy note 253. 1 – 9. see e. g. caballero, r. j., t. hoshi and a. k. kashyap. 2008. zombie lending and depressed restructuring in japan. american economic review 98 ( 5 ). 1943 – 77 ; banerjee, r. n. and b. hofmann. 2020. corporate zombies : anatomy and life cycle. bis working paper 882 ; and citations therein. see european central bank. 2011. approaches to monetary policy revisited – lessons from the crisis. sixth ecb central banking conference, 18 - 19 november 2010. conference proceedings. 168 – 173. expectations. 9 keeping inflation expectations anchored, as we would say today, minimizes the period of transition back to price stability and, thus, also minimizes output and employment losses. 10 well - anchored inflation expectations considerably reduce the extent to which current high inflation rates could become engrained in the system, e. g. through wage - price spirals. moreover, according to alexandre lamfalussy, the most effective anti - inflationary measures are measures that “ bite : ” people tend to “ give pride of place to those facts that affect their daily life, rather than to statistics. ” 11 he thought that while promises of future convergence to fixed rules or targets may serve a useful role, actions and results that substantiate this commitment are at least as important. 12 what can we learn from baron lamfalussy ’ s thinking of more than four decades ago? well, a good deal. as i argued in a recent presentation13 in october 2022 in warsaw, monetary policy must be credible – now more than ever : monetary policy credibility is crucial to maintain inflation expectations anchored and to minimize the costs of disinflation. for precisely this reason, we – the members of the governing council of the ecb – did not disregard the influence of the current inflationary surge by taking a “ wait - and - see ” approach in the euro area. ultimately, the losses we as euro