Lecture Abstract

The global financial crisis has tested the policy force of central banks by pushing them into uncharted territory. The crisis has also unleashed a vigorous debate on what lessons central banks should take away from the crisis, and how they should respond to them. These lessons span a wide spectrum – the mandate of central banks, the rationale for and limit to unconventional policies, their responsibility for financial stability, and most importantly on the nature and extent of the autonomy of central banks.

Are developing country central banks struggling with the same questions? In a way yes, because the core mandate of central banks, advanced or developing, remains the same – maintain financial and macroeconomic stability as defined by low and steady inflation and sustainable growth. But developing country central banks face a whole set of different dilemmas and challenges. 

The tension between restraining inflation and supporting growth, a core dilemma in central banking everywhere, is more acute in the case of developing countries. Also, developing country central banks have to manage the forces of globalization by opening up their economies but without getting blown away. They have to secure financial stability without thwarting the growth of financial markets. And they have to work towards building institutions, modernizing financial market infrastructures and furthering financial inclusion.

The seminar will focus on the dilemmas developing country central banks face in securing the economic resilience of their countries.

About the Speaker

Dr Duvvuri Subbarao served as Governor of the Reserve Bank of India for five years (2008-13). Prior to that, he was Finance Secretary to the Government of India and Secretary to the Prime Minister’s Economic Advisory Council.

Dr Subbarao was a career civil servant in India for over three decades where he worked in various positions, acquiring hands on experience in public finance management at national and sub-national levels. He was also actively involved in formulating and implementing economic and financial sector reforms in India.

Dr Subbarao was a Lead Economist in the World Bank (1999 – 2004) where his responsibilities involved advising developing countries on public finance reforms.

Dr Subbarao studied MSc in Physics at the Indian Institute of Technology, Kanpur finishing at the top of his class. He went to Graduate School at Ohio State University where he got an MS in Economics, and later went to MIT as a Humphrey Fellow to study Public Finance. He earned his PhD in Economics from Andhra University in India.

Dr Subbarao went in as Governor of the Reserve Bank of India just a week before the global financial crisis erupted in full in mid-September 2008, and he led the effort to mitigate the impact of the crisis on the Indian economy and to institute economic and financial sector reforms reflecting the lessons of the crisis.

Dr Subbarao was alternate Governor for India on the Governing Boards of both the World Bank and the IMF. He participated actively in the G 20 meetings, the meetings of the International Monetary and Financial Committee (of the IMF), bi-monthly meetings of Governors at the Bank for International Settlements (BIS) in Basel, the Asian Consultative Committee of central bank governors and a host of other international committees and conferences where his views were respected for the emerging market perspective he brought to bear on the discussions, especially in crisis management, the spillover impact of unconventional monetary policies of advanced economies and post-crisis reforms

Dr Subbarao has been a Distinguished Visiting Fellow at the National University of Singapore (NUS) since mid-2014, attached concurrently to the Business School and the Institute of South Asian Studies. While at NUS, he wrote a book “Who Moved My Interest Rate” which was acclaimed for the exposition of crisis management from an emerging economy perspective. At NUS, he also worked on a host of public policy issues in the areas of macroeconomic management, central banking, financial sector regulation, challenges of globalisation and public policy leadership.