Monitoring of Global Economy in RBI
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\title{Monitoring of Global Economy in RBI}
\author{Narayan PRADHAN}
\institute{RESERVE BANK OF INDIA (RBI)}
\date{March 27, 2019}
\begin{document}
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\titlepage
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\frametitle{Basic objectives of global monitoring}
\begin{itemize}
\item Monetary Policy
\begin{enumerate}
\item Assessment of external sector
\item Monitoring of INR volatility
\item Current account imbalances
\end{enumerate}
\vskip 0.5cm
\item Financial Stability
\begin{enumerate}
\item Stress test on bank balance sheet
\item Network analysis
\end{enumerate}
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\item International cooperation for (fine-tuning) Monetary Policy
\end{itemize}
}
\frame{
\frametitle{International Department (ID)}
\begin{itemize}
\item International Department within the Reserve Bank of India (RBI) monitors global developments - instituted in November 2014
\item Department is the nodal unit for international financial diplomacy functioning in coordination with the Government
\item The Department has five divisions:
\begin{enumerate}
\item Fund-Bank Division
\item BIS Division
\item G20 Division
\item Financial Stability Board (FSB) Division
\item Regional Financing Arrangement Division (RFAD)
\end{enumerate}
\item Synergy maintained through coordination with other Departments of the Bank
\end{itemize}
}
\frame{
\frametitle{Functional Aspects - ID}
\begin{itemize}
\item The above divisions monitors global developments in tandem
\item Approach of the Department is to suggest/shape the stance on issues under deliberation/negotiation in various international bodies
\item Maintain liaison with international bodies and appraise Top Management through preparation of briefs
\item Direct participation (of staff members) in international meetings made through presentation and intervention
\item It draws upon multi-disciplinary research to formulate or advocate India's stance in multilateral fora
\end{itemize}
}
\frame{
\frametitle{Macroeconomic Analysis in RBI - General Framework}
\begin{itemize}
\item The Group lead by an Advisor(s) delegates work - both analytic and empirical - to Directors in various divisions
\item The policy-relevant research on topical issues are carried by staff members - drawn from research and operational areas
\item Research staff conducts in-depth analysis of key global macroeconomic developments and their impact on Indian economy
\item Timely updates on global economic developments are maintained through data collation and analysis of current topics
\item Also conducts seminars and surveys on the behest of Economic forums
\end{itemize}
}
\frame{
\frametitle{Synergy with Research and Operational Departments}
Analytical notes on:
\begin{itemize}
\item Global spillover and capital flows
\item Monitoring of India's merchandise trade
\item Balance of Payments (BoP) developments - analysis and Press Release
\item Tracking of Exchange rate movements (most important)
\item Foreign exchange reserves
\item Analysis of commodity composition
\item direction of merchandise trade
\item Prepare materials for Annual Reports, Financial Stability Report and finally Monetary Policy
\end{itemize}
}
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\frametitle{Engagement of ID with Multilateral Institutions (1)}
Department coordinates the work relating to:
\begin{itemize}
\item International Monetary Fund/World Bank:
\begin{enumerate}
\item Article IV consultation
\item General Review of Quotas
\item Financial Sector Assessment Program (FSAP)
\end{enumerate}
\end{itemize}
\vskip 0.5cm
\begin{itemize}
\item Bank for International Settlements
\begin{enumerate}
\item Basel Committee on Banking Supervision (BCBS)
\item Committee of Global Financial System (CGFS)
\item Committee on Payments and Market Infrastructure (CPMI)
\end{enumerate}
\end{itemize}
}
\frame{
\frametitle{Engagement of ID with Multilateral Institutions (2) }
\begin{itemize}
\item Group of 20 (G20):
\begin{enumerate}
\item Finance Ministers and Central Bank Governors Meeting (FMCBG)
\item International Financial Architecture (IFA)
\item Framework Working Group (FWG)
\item Investment and Infrastructure Working Group (IIWG)
\end{enumerate}
\end{itemize}
\vskip 0.5cm
\begin{itemize}
\item South Asian Association for Regional Cooperation (SAARC Finance):
\begin{enumerate}
\item SAARC Swap Arrangement
\item BRICS Contingent Reserve Arrangement
\item Database on SAARC Finance
\end{enumerate}
\end{itemize}
}
\frame{
\frametitle{Interaction with Standard Setting Bodies}
\begin{itemize}
\item Financial Stability Board:
\begin{enumerate}
\item Financial Action Task Force (FATF)
\item Monitor and advise on market developments and their implications for regulatory policy
\item Monitor and advise on best practice in meeting regulatory standards.
\end{enumerate}
\end{itemize}
\vskip 0.5cm
\begin{itemize}
\item International Association of Insurance Supervisors (IAIS)
\item International Accounting Standards Board (IASB)
\item International Organization of Securities Commissions (IOSCO)
\end{itemize}
}
\frame{
\frametitle{Sensitivity Analysis for Forex Risk (FSU)}
\begin{itemize}
\item Resilience of banks to exchange rate risk
\begin{enumerate}
\item Shock 1: 10 percent depreciation of INR
\item Shock 2: 20 percent depreciation of INR
\item Shock 3: 10 percent appreciation of INR
\item Shock 4: 20 percent appreciation of INR
\end{enumerate}
\item currencies considered for the analysis are:
USD, EUR, GBP, JPY, AUD, CAD and CHF
\item Shocks are applied on the net open positions (long or short) for each currency bank-wise
\end{itemize}
}
\frame{
\frametitle{Current Focus}
\begin{itemize}
\item Trade/Tariff war emanated from US
\item Monetary policy normalization
\item Health of the banking sector
\item Interaction between macroprudential, fiscal and monetary policy
\item Impact of Macroprudential policies
\item Dashboard for monitoring Macro-Financial Risk
\item Issues relating to Housing/Retail Credit
\item Regulatory issues relating to macro-prudential policy framework
\end{itemize}
}
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\textbf{ Thank You}
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}
\end{document}