Questioning the Orthodoxies

 Statements like “money, finance and banking are at the crossroads at this juncture” have become a much-used cliché, but tend to be true for most of the recent past. This year, too, is no exception. At home we have seen that credit growth both from banks and non-banks continue to suffer. Notwithstanding some initial green-shoots in the banking sector’s non-performing assets front, we have faced trouble in a major co-operative bank and more recently in a private sector bank in India. We continue to hear about mergers of major private and public sector banks, but without necessarily having any clarity about a strategic vision for the future of the public sector banks in India. Even after 50 years of bank nationalisation, concerns on fi nancial inclusion still continue to haunt us. At a global level, we are not yet sure whether the regulatory oversight had been reformed in the right direction after the financial crisis of 2008–09. The model of hyper-globalisation continues to be questioned in the aftermath of the Sino-US trade war. This special issue of the Economic & Political Weekly is devoted to some of these issues and beyond. 

Against the backdrop of what has been termed as the North Atlantic financial crisis (NAFC) of 2007–08, Rakesh Mohan (p 28), in the first paper, “Finance and Monetary Policy Beyond Neo-Liberalism: The Way Ahead for Emerging Markets,” probes into issues relating to monetary policy and fi nancial regulation from the standpoint of emerging market and developing economies (EMDEs). The post-NAFC world is seen to have had three key implications for the financial sector: (i) the mandate of central banks got extended to include both price and fi nancial stability objectives; (ii) financial markets turned out to be inherently unstable yielding at times ineffi cient outcomes; and (iii) it was realised that sustained efficient operation of financial markets required continuous oversight and management from the concerned authorities.