Referring to FMs Budget speech on establishment of a special body to look after financial stability, it says “An apex level Financial Stability and Development Council to be set up with a view to strengthen and institutionalize the mechanism for maintaining financial stability. This Council would monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues.
The statement is so weird to me. What does the FM mean by developing an APEX body?
I understand his concern for the dire need of financial stability which has become a buzz word in the post crisis world in every economy.
Financial stability is a phenomenon which is the result of various decisions taken by different bodies and the reaction of economy to it. It is neither interest rate nor a share price.
Enough of the confusion created by recently introduced interest rate futures, a lack of clarity as to which regulator, the RBI or SEBI, will regulate that are traded on the National Stock Exchange.
Enough of the confusion created over the demarcation of regulatory roles between the IRDA and SEBI exists over the popular unit linked insurance plans (ULIPs).
These are just the products that have created confusion and what if such a body is established? It would create chaos in division of responsibility, something like drawing the boundaries in the darkness and asking the bodies to walk with in.
Rather than creating such a hazy concept, the government of FM can think of redefining or refining the responsibilities of RBI, SEBI, IRDA and PFRDA. No more apex bodies, FM is enough. J
