Financial Stability and Development Council

The finance minister in his 2010 budget proposes to create a Financial Stability and Development Council which will be responsible for financial stability and also issues and disputes between financial regulators:

Financial Stability and Development Council

• An apex level Financial Stability and Development Council to be set up with aview to strengthen and institutionalise the mechanism for maintaining financial stability.

• This Council would monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues.

Is this a major development? Can’t say. The devil is clearly in the detail. Key are composition of the Council, governance mechnism and who is the boss of this Council. The Council will also have to walk a thin line between accountibility and autonomy of the regulators. And finally, how is this different from the talk shop known as the HLCC (High Level Coordination Committee on Capital Markets – narrowness of the name notwithstanding).