I then moved on to the narrow area of payment and settlement systems and spoke on the role played by RBI in modernizing payment systems and in facilitating innovation. I spoke about how we try to be a responsible regulator, encouraging innovation, but at the same time ensuring that innovations add real value and do not compromise financial stability or customer interest. 50.
In the process, the Reserve Bank had to manage liquidity in the system in such a way that the impact of the high fiscal deficit on monetisation as also on interest rates is minimized. In effect, while the fiscal impact on monetisation has been reduced significantly, the interplay between fiscal and monetary operations continued to be significant in the post-1997 scenario.