One view was that, similar to the practice in some other countries, the central banks may take decisions not only on intervention but also on sterilisation and accordingly the central bank may issue its own bonds. As a prudential requirement, the RBI is prohibited from such bond issuances. As a result, the MSS was introduced whereby sterilisation was through issuance of government securities.
Simultaneously, given the larger public policy implications of the exchange rate in the Indian context, it was deliberated whether it was desirable for the central bank alone to take a view on the extent of sterilisation.