In his keynote address at the RBI@90 High-Level Conference held in New Delhi on October 14, 2024, Governor Shaktikanta Das emphasized the pivotal moment faced by central banks in the post-pandemic and geopolitical era. He highlighted that central banks are operating amidst significant structural shifts, including geo-economic fragmentation, evolving industrial and trade policies, technological advancements, and climate change. These transformations are challenging their traditional mandates, requiring them to explore new pathways to safeguard financial stability and economic resilience.
Reflecting on the RBI’s 90-year journey, Das underscored the institution’s role in shaping India’s economic aspirations and stressed that the evolving global environment demands constant adaptation by central banks. He identified three areas where the future of central banking would likely be redefined: monetary policy, financial stability, and new technologies.
Discussing monetary policy, Das acknowledged that while central banks globally adopted unconventional measures during the pandemic, the limitations of such strategies have become apparent, particularly with surging public debt. He noted the challenges faced by emerging markets from capital flow volatility and highlighted India’s calibrated approach during crises, which helped mitigate adverse impacts.
On financial stability, the Governor pointed to the unintended consequences of prolonged low-interest-rate policies, which encouraged risky asset prices and exposed financial systems to volatility. He emphasized the need for central banks to strike a balance between inflation control and safeguarding financial stability, especially in light of recent banking sector stress and market disruptions.
Das also delved into the impact of technological advances, including digital payment innovations and Central Bank Digital Currencies (CBDCs). He emphasized India’s leadership in creating robust digital public infrastructure and fostering cross-border payment systems. However, he warned of emerging risks from rapid digitalization, including cyber threats, misinformation, and AI-driven systemic risks.
In conclusion, Das reaffirmed the need for central banks to remain vigilant, adaptable, and resilient amidst evolving challenges. He called for continuous efforts to support sustainable growth, maintain price stability, and promote sound financial systems, ensuring central banks remain relevant and effective in an increasingly complex global landscape.
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