Viral V Acharya: On the importance of independent regulatory institutions - the case of the central bank

Text of the A. D. Shroff Memorial Lecture by Dr Viral V Acharya, Deputy Governor of the Reserve Bank of India, Mumbai, 26 October 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

No analogy is perfect; yet, analogies help convey things better. At times, a straw man has to be set up to make succinctly a practical or even an academic point. Occasionally, however, real life examples come along beautifully to make a communicator's work easier. Let me start today with an antecedent from 2010 as it is particularly apposite for the theme of my talk:

"My time at the central bank is up and that is why I have decided to leave my post definitively, with the satisfaction of my duty fulfilled," Mr Martin Redrado, Argentina's central bank chief, told a news conference late on Friday, January 29, 2010.

"We have arrived at this situation because of the national government's permanent trampling of institutions," he said. "Basically, I am defending two main concepts: the independence of the central bank in our decision-making process and that the reserves should be used for monetary and financial stability."