Certain regulations have the collateral effect of adversely affecting market liquidity. There should be coordinated efforts to address the unintended consequences of such taxation, accounting or regulatory requirements without undermining the basic objective of such policies. c. Segmentation of markets – Market segmentation fragments liquidity and leads to price differentials which erodes the efficacy of benchmarks.
Before we discuss application of technology to achieve financial inclusion, let us convince ourselves of the imperative of financial inclusion. The financial sector, amongst others, performs two important functions. It enables inter-temporal transfer of income – you can transfer surplus income of one period to a lean period and you can borrow in a lean period against future income.