Going forward, greater challenges will emerge as the footprints of Indian banks increase in the offshore markets, the range of products expand, non-resident participation in domestic markets grows and as capital account convertibility increases. Market participants will have to prepare themselves to manage the changes and the risks associated with globally integrated markets.
Also, if asset-purchase programs in emerging markets were perceived as central bank financing of governments, it would exert pressure on risk premia, the exchange rate and capital outflows, contrary to the original objective of easing financial conditions.