Capital Account Convertibility and Risk Management in India
October 1, 2007
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Summary
This paper takes a closer look at the prudential and regulatory measures needed to prepare India's financial system to manage the risks arising from fuller capital account convertibility (FCAC). The paper contributes to the debate on FCAC in two ways. First, it reviews the potential and existing financial stability challenges to FCAC in India. Second it studies how prudential regulation and supervision is addressing these challenges. The main conclusion is that regulatory and supervisory measures alone are not enough and will need to be complemented by improvements in Indian banks' risk management and further development of the domestic capital markets.
Subject: Asset and liability management, Banking, Capital account convertibility, Credit risk, Market risk
Keywords: bank, derivative instrument, interest rate, market, risk, WP
Pages:
12
Volume:
2007
DOI:
Issue:
251
Series:
Working Paper No. 2007/251
Stock No:
WPIEA2007251
ISBN:
9781451868142
ISSN:
1018-5941
