Yet another scenario could be that increased money holdings may be associated with increased purchases of assets and higher asset prices. If sustained, wealth effects would ultimately exert upward pressure on consumer prices. If this is not sustainable, a subsequent bust is likely to create downside risks to price stability. Only in this latter sub-case would we be confronted with financial stability issues too.
48. The feedback received on the draft guidelines has largely been positive but the key issue that has been raised relates to inclusion of short term money market instruments such as CDs/CPs as eligible securities for repo. To begin with, it is proposed to start only with highly rated bonds. The final guidelines in this regard would be issued shortly. Foreign exchange market 49.