consumers and the financial system. it is therefore understandable that authorities around the world are calling for stablecoins to be regulated. the same rules must be applied to all activities that give rise to the same risks, irrespective of the technologies used or the identity of the service providers. in other words, we should uphold the principle of “ same business, same risk, same rules ”, which is at the core of technology - neutral regulation. providers of innovative services should not be penalised just because they use new technologies. similarly, portraying existing financial products as something new by using innovative technologies to circumvent regulation must not be rewarded. challenges for both private and public sectors the announcement of the “ libra ” global stablecoin initiative was a wake - up call for both the private and the public sectors to press ahead and make further progress on issues such as cross - border payments. we must admit that there is indeed an unmet consumer demand for payment services that are faster, cheaper and easier to use and that can work across borders. the combination of rapid technological progress and the entrance into the market of large global digital firms is putting established banks and payment service providers under pressure to innovate and compete on scale and user convenience. for instance, the combined volume of new credit provided by fintech and bigtech in 2017 exceeded 500 billion us dollars – a tenfold increase from 2014. financial institutions will need to rise to the challenge. however, to date, european payment service providers have struggled to develop a common solution that can match up to large global digital firms ’ initiatives in terms of immediacy, convenience, scale and branding power. in particular, the european instant payments landscape remains fragmented, with no european solution emerging for point - of - sale and online payments. the public sector is already responding to the advent of stablecoins in a coordinated manner. work is underway under the umbrella of the g20 to assess their risks, examine the applicability of the existing rules, and identify gaps in the current regulatory and oversight framework. given the cross - border nature of global stablecoin arrangements, such international coordination is crucial to ensure consistency across borders and prevent regulatory arbitrage. otherwise, providers of stablecoins, or any new financial services for that matter, will have every incentive to operate in the most lenient regulatory environment. we have to make sure that there is no scope for regulatory arbitrage. for this reason, we need to have information -

compulsions but also in a predictable fiscal framework. the environment of price stability coupled with steady growth that characterized the great moderation came to be seen as a vindication of the merits of freeing monetary policy from fiscal dominance. 41. that happy state of affairs ended in the aftermath of the crisis, and fears about fiscal dominance of monetary policy have resurfaced. there are widely shared concerns about the extraordinary fiscal expansion necessitated by the crisis, and when and how long it will take to reverse that. but, by far the larger concern is not about the crisis related cyclical deficits but about the structural fiscal deficits looming large in most advanced economies. current estimates are that rich countries will see a rapid increase in their social security payment obligations because of ageing populations and shrinking workforces, and that they will need to raise significant amount of debt year - on - year to finance these commitments. if that be the case, monetary independence will remain circumscribed by fiscal compulsions into the medium term. 42. the sovereign debt crisis in europe over the past few months has turned out to be yet another arena where the tensions between fiscal and monetary policies played out. what characterizes monetary unions like the euro system is that member countries pursue independent fiscal policies but do not have recourse to exchange rate or monetary policy levers to make the adjustment needed. this underscores the importance of sound and credible fiscal policies by member countries to ensure the independence and credibility of their collective monetary policy. absent that, monetary policy will become hostage to fiscal excesses of individual members. 43. where do we in india stand on this? it will be fair to say that we followed the global trends, indeed more so. during the 1970s, and much of the 1980s, monetary policy was almost totally hostage to fiscal policies. however, again following trends around the world, there has been a gradual abatement of fiscal dominance of monetary policy starting the 1990s. 44. the easing of fiscal pressures on monetary policy has been a continuous process but two discrete events marked significant milestones. the first was the agreement between the reserve bank and the government to completely phase out ad - hoc treasury bills from april 1997, a move that saw the termination of the egregious practice of automatic monetization by the central bank of the government ’ s fiscal deficit. the second was the enactment of the fiscal responsibility and budget management ( frbm ) act which, among other things, prohibited the reserve bank from financing