Financial Markets and the Economy - Intersections

(The following article appeared in Moneycontrol.com, per link below: https://www.moneycontrol.com/news/opinion/a-re-look-at-rbis-extraordinary-steps-in-2013-to-stabilise-the-rupee-8887771.html ) The 2013 RBI FCNR(B) Swap Window – Review & Takeaways   In the wake of recent volatility in our currency markets, some commentators have – somewhat prematurely - recalled the extraordinary steps taken by RBI in 2013.    To recap, post the taper tantrum of mid-2013, besides other steps, the RBI announced two special swap windows in September 2013.    First, it offered to swap US$ raised by banks from foreign currency non-resident (FCNR) deposits of maturity 3-year and above into INR, at a concessional rate of 3.5% p.a., about 3.0% cheaper than the market at that time.  Second, it allowed banks to raise foreign currency funding and swap them into INR at a concessional rate of 1% below market.    Collectively, the two swap windows brought in US$ 34B at a crucial time for India, with US$ 26 bn

(The following article appeared in Moneycontrol.com, per link below:  https://www.moneycontrol.com/news/opinion/why-india-needs-retail-participation-in-fixed-income-markets-and-how-8779601.html) Why India needs retail participation in fixed income markets …and what can be done about it   Today, retail participation in domestic debt markets is more than just a ‘nice-to-have’. Amidst persistent inflation, uneven growth, rising inequity and other economic stresses, retail participation in debt markets can provide policymakers with added degrees of freedom. We explore how and consider what holds back retail debt investments. When banks give out loans, they credit beneficiary accounts and create fresh money. Similarly, when banks make loans to the government and the government then spends, fresh money is created. During times of persistently high inflation such as now, creation of fresh money is worrisome for policymakers.   In contrast, when savers directly lend money to borrowers (includi