2  BIS central bankers’ speeches  Access to alternate sources of capital The ability of MSMEs (especially those involving innovations and new technologies) to access alternative sources of capital like angel funds/risk capital needs to be enhanced considerably. For this purpose, removing fiscal/regulatory impediments to use such funds by the MSMEs should be considered on priority.
In addition, the central bank must also take into account the issue of Forex arbitrage. Over the past two years, capital inflows have led to substantial rise in Forex position. The amount of capital inflow is directly linked to domestic and foreign interest rate differentials.