Cooperative banks must realise that banking in today’s world cannot be independent of technology, not so much because of competition from commercial  3  A Committee set up in 2004 to make recommendations for strengthening the rural cooperative credit institutions in the country.
This flaw in the intellectual underpinning misled central banks to downplay their financial stability functions and supported the general view that monetary and microprudential policy can be conducted separately, with monetary policy instruments geared towards achieving macroeconomic stability, and financial regulation and supervision aimed at preserving financial stability in the spirit of Tinbergen’s policy assignment rule.5 However, it has become clear by now that this strictly dichotomous view is flawed since monetary policy and financial stability policy are intrinsically linked to each other, given the powerful interactions between financial and economic conditions.