Wednesday, 13 November 2013 - 11:55
India's top banker urges regulators to exert greater caution
India's new central bank governor, Raghuram Rajan, called on Tuesday for regulators to exert greater caution when faced with the potentially inflammatory mix of asset price inflation and easy credit.
Addressing the Bank of Italy on lessons learned after the economic crisis of 2007 to 2009, Rajan said the key to getting the benefits of financial access was to "always be conservative, taking away the punch when the party gets going."
Looking back at the Great Depression in the US in the 1930s in an examination of speculative bubbles and their effect on monetary policy, Rajan said it was clear than greater credit availability tended to make the economy sensitive to shocks.