But now, with RBI permitting / clarifying interoperability, why is it that the transactions at BCs are not picking up, which ultimately, if increased, would change the cost and access equation, making it economically viable for financial service providers to reach poor and isolated individuals and communities?
Indeed, as I have mentioned, foreign capital flows to emerging market economies tend to be procyclical, heightening the need for countercyclical policy measures through which these countries can cope with such procyclical flows. Macroprudential regulation can be a significant help in this respect, by changing financial institutions’ incentive structures in ways that internalize the negative externalities caused by their own activities.