The Reserve Bank has been at the forefront in nurturing institutions and developing financial markets in India – the money market, the foreign exchange market and the government securities market. Efforts in recent years have focussed on enhancing the depth, integrity, transparency and efficiency of these markets. 6.
What is required is a more symmetric approach: one that leans against the emergence of asset price booms as well as dealing with the consequences of asset price busts. By encouraging more responsible behaviour on the part of investors, such an approach should make such cycles of boom-bust less likely. But substantial practical questions remain.