This is an important difference between EMU surplus countries and some emerging economies where a market-driven correction of imbalances is significantly hampered by policy interventions. To sum up, as the underlying causes of global imbalances are mainly still operative, imbalances are continuing to pose risks to the global economy and are incompatible with the G20’s goal of strong, balanced and sustainable growth.
Ironically, banks have also been supporting several market segments of non-bank intermediation channel – as providers of secondary market liquidity, for credit enhancement and as market makers. This makes the job of Reserve Bank, as a regulator, even more critical because of the interconnectedness of all economic agents with the banking system.