First, despite the progressive deregulation since the early 1990s, some categories of interest rates continue to be administered, thereby muting the impact of monetary policy on the structure of interest rates. Second, external sector management is complicated by the incentives for some elements of capital flows provided by public policy setting.
It was for the first time that EMEs turned out to be active partners in finding meaningful resolution mechanisms to a global problem. III. Impact and policy responses in India  Why was India impacted? In the initial phase of the crisis, the impact on the Indian financial markets was rather muted as the direct exposure of banks to subprime assets was negligible.