RBI Governor Addresses 3 Of The Biggest Emerging Risks To Financial Stability

Listen to RBI Governor Shaktikanta Das speak on what he says are the three biggest risks to financial stability. Addressing the topic of 'Central Banking at Crossroads' at the RBI@90 High-Level Conference organised by the Indian central bank, the RBI Governor listed out the divergence in global monetary policies - monetary easing in some economies, tightening in a few, and pause in several other economies as his biggest concern. "This can lead to volatility in capital flows and exchange rates, which may disrupt financial stability", Das said, adding, "We saw a glimpse of this with the sharp appreciation of the Japanese Yen in early August which led to disruptive reversals in the Yen carry trade and rattled financial markets across the globe." The Governor also talked of the rapid expansion in private credit markets, and warned that higher interest rates, aimed at curtailing inflationary pressures, have led to increase in debt servicing costs, financial market volatility, and risks to asset quality. He added that the correction in commercial real estate prices in some jurisdictions can put small and medium-sized banks under stress.