mandated that all rbi - regulated entities should report the otc trades in corporate bonds on this platform. other regulators have also prescribed such reporting requirement in respect of their regulated entities. this has resulted in building a credible database of all the trades in corporate bond market providing useful information for regulators and market participants. ii. clearing houses of the exchanges have been permitted to have a pooling fund account with rbi to facilitate dvp - i based settlement of trades in corporate bonds. iii. repo in corporate bonds was permitted under a comprehensive regulatory framework. iv. banks were permitted to classify their investments in non - slr bonds issued by companies engaged in infrastructure activities and having a minimum residual maturity of seven years under the held to maturity ( htm ) category ; v. the provisioning norms for banks for infrastructure loan accounts have been relaxed. vi. the exposure norms for pds have been relaxed to enable them to play a larger role in the corporate bond market. bis central bankers ’ speeches vii. credit default swaps ( cds ) have been introduced on corporate bonds since december 01, 2011 to facilitate hedging of credit risk associated with holding corporate bonds and encourage investors participation in long term corporate bonds. viii. fii limit for investment in corporate bonds has been raised by additional us $ five billion on november 18, 2011 taking the total limit to us $ 20 billion to attract foreign investors into this market. in addition to the limit of us $ 20 billion, a separate limit of us $ 25 billion has been provided for investment by fiis in corporate bonds issued by infrastructure companies. further, additional us $ one billion has been provided to the qualified financial institutions ( qfi ). ix. the terms and conditions for the scheme for fii investment in infrastructure debt and the scheme for non - resident investment in infrastructure development funds ( idfs ) have been further rationalised in terms of lock - in period and residual maturity ; and x. further, as a measure of relaxation, qfis have been now allowed to invest in those mf schemes that hold at least 25 per cent of their assets ( either in debt or equity or both ) in the infrastructure sector under the current us $ three billion sub - limit for investment in mutual funds related to infrastructure. xi. revised guidelines have been issued for securitisation of standard assets so as to promote this market. the guidelines focus on twin objectives of development of bond market as well as provide investors a safe financial product. the interest of the originator

##ly obvious – previously, the financial markets appeared to assume that, should individual euro - area countries experience financial difficulties, the european community would bail them out, even though the eu treaty prohibits mutual liability. as a result, doubts as to the soundness of individual governments led to doubts regarding the euro area as a whole. it is therefore extremely important that, in the future, it is possible for over - indebted states to default. for one thing, this would significantly limit the extent of future crises ; for another, it would reduce the likelihood of the european community of states having to intervene. until then, however, we still need to overcome a few obstacles. one major obstacle is the strong nexus between banks and sovereigns. it means that insolvent banks can pose a threat to the solvency of entire governments, and vice versa. banks are not required to back bonds issued by european governments or other oecd countries with capital, and can hold unlimited quantities of them on their books. in theory, a bank ’ s business could therefore consist entirely of bonds issued by a single state. this rule creates a troubling risk concentration. to sever this unhealthy link, we need to make just one simple change. in future, banks must back the government bonds they purchase with sufficient capital. in short, the existing rules need to be improved to ensure that both creditors and borrowers consider the risks more carefully when lending or borrowing. however, this reform won ’ t be enough on its own to resolve the euro area ’ s underlying problems. another starting point for reform would therefore be to intensify the coordination and integration of economic policy within the euro area. without an integrated economic policy, it is difficult for the economies in a currency union to converge. implementing deficit ceilings for government debt is another area in which progress needs to be 2 / 4 bis central bankers'speeches made. all member states should adhere to these ceilings – in no way should they be seen merely as recommendations. the onus here is clearly on politicians. central banks can apply pressure, at most. 4. where is europe heading? now, there will be some who say that these reform proposals sound too ambitious given the current state of europe. but there are signs that the eu is indeed both willing and able to reform and that, overall, it is making progress. i would therefore like to bring three points to your attention. first, it goes without saying that you can think long and hard