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RBI Governor Raghuram Rajan first Indian to be appointed BIS Vice Chairman

, ET Bureau|
Updated: Nov 11, 2015, 01.33 AM IST
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MUMBAI: Raghuram Rajan, the governor of the Reserve Bank of India, became the first Indian to be elected the vice-chairman of the Bank for International Settlements, the bank for global central banks which works to improve the financial stability and prescribes rules for banks across the globe. The 52-year-old Rajan who has been critical of central banks of the West for their excessive printing of money to bring back growth, would assist Jens Weidmann, chairman of BIS, who is also the head of Bundesbank, the German banking regulator.

“Raghuram Rajan was elected as the vice-chairman, the board of directors of the Bank for International Settlements (BIS), at its meeting in Basel held on Monday for a period of three years from November 10, 2015,” the RBI said in a release on its website.

Rajan, a former chief economist at the International Monetary Fund, saw his stature as an economist get a boost when he warned of the dangers of risks building up in the system in a symposium in 2005. He was prescient. The global financial markets were hobbled during the credit crisis. Indeed, he criticises western central banks for their easy monetary policies, which may lead to next crisis. “I do worry that we are slowly slipping into the kind of problems that we had in the thirties in attempts to activate growth,” Rajan told an audience at the London Business School in June.

“And, I think it’s a problem for the world. It’s not just a problem for the industrial countries or emerging markets, now it’s a broader game.’’

As the vice-chairman of BIS, he could attempt to influence rule making better than as a member. BIS, established in 1930 in Basel, Switzerland, is an international organisation consisting of central banks and monetary authorities of various countries. It was created through an international treaty (The Hague Agreements of 1930). Rajan who took over as the RBI governor in September 2013, joined the BIS board in December 2013. His current term as RBI governor ends next year.

“The board is responsible for determining the strategic and policy direction of the BIS, supervising BIS Management, and fulfilling the specific tasks given to it by the Bank’s Statutes. It meets at least six times a year,” BIS said on its website.
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