Also, the exchange rate is market-determined though the RBI closely monitors and occasionally intervenes to avoid volatility and also ensure orderly conditions in forex markets. We undertook financial sector reforms, especially banking reform as a prelude to liberalisation of some capital account transactions in the external sector. We discourage banks’ investments in real estate and stock markets.
The FOMC's significant aversion to the possible negative outcomes associated with these risks was part of a risk-management perspective--that is, that the economic recovery from a financial shock could be more difficult to manage than the financial shock itself. As for events after 1998, it is more difficult to identify a "pure" financial crisis.