India’s new central bank governor, Raghuram Rajan, is making an effort to persuade the U.S. Federal Reserve (and other central banks) that they need to pay more attention to the consequences of their actions for the developing world. Commenting from the sidelines of the IMF meeting in Washington last week he said:
- “If you want stronger global demand, you really need to think about international arrangements to deal with these issues,”
- “The volatility” that capital flows cause “on the way in as well as on the way out…is a cost. And we should weigh these things,”
- Said that if the developed world doesn’t pay adequate attention to the impact of its policies on developing countries, it could end up sowing the seeds of another crisis
More details: India’s Central Bank Chief Pressures Fed (The Wall Street Journal is often gated, so if you’re unable to access the article try a search of Google news using the headline)
–
I read on the weekend that contrary to having a dual mandate, the Fed actually has a triple mandate: price stability, employment, and financial stability. Rajan seems to want to add a fourth mandate – regard for the impact of policies on other nations. Bernanke (and soon, Yellen) are copping it at home and abroad.
