The current economic era is fascinating, and India’s exceptional achievements make the country unique. The country has successfully dealt with many challenges, including health issues during the Covid-19 outbreak and recent events in Europe, without causing significant disruptions or economic spillovers. These successes provide valuable lessons for the world, especially in the areas of interest rate management, inflation control, supply chain resilience and health care. India’s experiences can serve as a model for other countries, lead to the necessary updating or rewriting of economic textbooks for modern times and elevate India’s presidency to a new normal.
In fact, India’s inclusive model is exemplified by Jandan accounts, Aadhaar and mobile connectivity. Together, these fundamental pillars form the India Stack, a powerful inclusive model that offers a significant global opportunity. India Stock has enabled millions of previously unbanked individuals to access financial services, providing them with a pathway to economic empowerment. Furthermore, the success of the inclusive model can serve as a blueprint for the G20 and other countries seeking to address similar challenges in health, education and other sectors.
As Indian companies have mastered inclusion, there is an imperative to expand into other regions, including Europe and a significant portion of South America, Africa. By exporting their inclusive model, Indian businesses can play an important role in transforming the lives of underprivileged people in different parts of the world. This expansion will not only create new economic opportunities but also promote sustainable growth and bridge the digital divide.
Sovereign debt is a very important issue that can have long-term consequences for countries around the world. Since different countries have accumulated their national debt in different ways, including borrowing through government agencies, the complexity of the matter demands a nuanced and nuanced approach. Over time we will see very interesting results. The evolving economic landscape necessitates a more nuanced examination of the issue, unlike approaches taken in the past. Understanding the nuances of each country’s debt consolidation process is critical to developing effective solutions and ensuring economic stability.
In my view, coordination between monetary and fiscal policies will be hampered by the divergent approaches taken by countries such as the US and the European region in managing their monetary policies. However, I believe that through discussions, we can see the emergence of innovative mechanisms for cooperation, resource utilization and financial settlement. Also, we may not see countries suddenly abandoning past thinking; Rather it will be a gradual process.
Reforming multilateral institutions remains a significant pillar of the G20 agenda. This task is facilitated by NK Singh, co-convenor of the G20 Independent Expert Group, which focuses on reforms within multilateral development banks (MDBs). The Committee has engaged in key discussions with several stakeholders, including representatives of multilateral banks and borrowers.
Capital constraints are generally considered a major constraint to developing the lending pipeline of MDBs. So how can you increase the credit pipeline? These companies’ access to foreign exchange depends on their credit rating. As a result, it becomes a key feature of MDB reforms. In my own experience, I have observed that MDBs operate under strict self-imposed guidelines to maintain their coveted AAA status with credit rating agencies. If they choose to run a note or two below AAA, significant additional borrowing could occur. It is important to recognize that MDBs are among the world’s largest borrowers, and their credit needs cannot be easily replaced.
At the New Development Bank (a multilateral bank set up by the BRICS group of developing countries), we were given an AA+ rating even though we didn’t have a AAA parent and our average rating was slightly above BBB. This demonstrates the relevance of Southern or borrowing countries working together to improve their market position and access to finance. This joint strategy creates new ways to effectively use existing capital and raise additional debt for green projects, poverty alleviation and other development needs in developing countries. Overall, there is difficulty in balancing credit ratings and global development financing.
Business finance is changing. Over the past three and a half years, alternative financial settlement systems have grown alongside SWIFT. These innovative mechanisms are reshaping business transactions, promising a more efficient and dynamic global financial environment.
Central Bank Digital Currency (CBDC) is an intriguing and viable financial development. While the pilot projects look encouraging, the regulator’s actions will determine its deployment. CBDC adoption provides a smoother and more efficient financial market settlement system, which is highly desirable. As we restructure settlement systems, CBDC will play a key role in transactions and asset management.
Artificial Intelligence (AI) is another transformative force that has become indispensable. It is used in industry to increase efficiency and customer service. For example, let’s take norms. In the area of financial and market regulation, several regulations and circulars have been promulgated, leading to various interpretations. Due diligence is part of the regulatory process, but consensus is difficult. AI will change this practice. By using AI machines to analyze a wide array of regulatory activities, a clear and concise view can be created to facilitate compliance. This represents a significant advance, revolutionizing the way regulated entities respond to regulatory demands. While some concerns have been raised about the dangers of AI, the positive potential it holds is immense. I am confident that regulators around the world will embrace and lead this transformative technology.
KV Kamath, Chairman, National Bank for Financial Infrastructure and Development (NaBFID), told Anand Adhikari. (Views are private)
„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.