6: Financial Sector Legislative Reforms Commission (FSLRC) •  FSLRC was constituted by the Government “with a view to rewriting and cleaning up the financial sector laws to bring them in tune with the current requirements”. FSLRC submitted its Report to the Government in March 2013. •  The Commission proposes shifting from rule based to principle based regulation.
Strengthened capital and liquidity buffers and improved incentives to assess and manage risk should all help reduce the pro-cyclicality of the financial system, and, in the new configuration of the financial services industry more than ever, help monetary policy to attain its traditional objectives. But should monetary policy itself embody in its objective function the health of the financial system?