Deep and liquid debt and derivatives markets are essential to ensure a robust and efficient financial system which aids economic development. In India, there exists a very large Government securities market, which needs to be regulated efficiently & effectively to ensure financial stability. The need for such regulation has been underscored by the global financial crisis.
Regulation may act as a guiding force in such times by prescribing appropriate rules, or by creating incentives for appropriate behaviour. We in India were reasonably insulated from the global financial crisis, but have been facing challenges. Our  12  BIS central bankers’ speeches  regulatory approach has been cautious and calibrated with focus on financial stability and market development.