RBI Guv Shaktikanta Das calls for reform in global financial institutions

The Reserve Bank of India ( RBI ) Governor Shaktikanta Das emphasised the urgent need for reforms within the international financial system to better support emerging economies while speaking at Macro Week 2024 event in Washington.  He called on key global organisations, including the International Monetary Fund (IMF) and the World Bank, to grant these nations a more prominent role in decision-making processes.

Enhancing Global Cooperation

Das highlighted that greater access to resources and an enhanced governance role for emerging economies would not only legitimize these institutions but also foster serious global cooperation in tackling macro-financial challenges. "The first and foremost priority should be reforming the international financial architecture," he stated, advocating for inclusive governance frameworks that reflect the realities of today’s global economy.

Addressing Vulnerabilities in the Financial System

The RBI Governor pointed out the vulnerabilities exposed in the global monetary and financial systems, particularly in light of recent events that have affected both advanced and emerging markets. He stressed the importance of improving global financial regulations to manage risks from private capital flows and the rising influence of non-bank financial intermediaries, which now hold a significant portion of global assets.

Mitigating Risks from Emerging Financial Trends

Das also addressed the complexities introduced by the growth of shadow banking, fintech, and decentralised finance, warning of potential contagion effects. He underscored that financial stability must be viewed as a "global public good" and called for a robust regulatory framework to mitigate associated risks.

The Role of Geopolitical Stability

Furthermore, he discussed the impact of geopolitical tensions on global economic policies, noting that sanctions, trade restrictions, and supply chain disruptions contribute to economic fragmentation. Das urged for enhanced cooperation among nations, particularly through the G20, to promote open and rules-based trade systems.

Call for Collaborative Efforts

He advocated for collaboration in technology transfer, investment in global public goods, and initiatives for a sustainable green transition. In summary, Das's remarks underline the necessity for inclusive and balanced reforms in the international financial architecture, emphasising that such changes are essential for fostering global stability and cooperation.