Central banks should look beyond just monetary policy and become ‘knowledge institutions’ to manage a globalised environment, said Reserve Bank of India Governor D. Subbarao.
Delivering a special address at the golden jubilee celebrations of the RBI Staff College here on Wednesday, Subbarao said the RBI should move up the value chain to position itself as a “knowledge institution”.
In the past five years, the world has been through an extraordinary economic crisis, and central banks are blamed for that. This would make central banks across the world go through a remarkable change, Subbarao observed.
There has been a rigorous debate across the world, including India, about the banks’ autonomy and accountability, he said.
What clearly emerges is that the central bank should go well beyond monetary policy.
Subbarao further said the RBI cannot function from an ivory tower and should refrain from shutting itself up in its own world.
It should be attentive to what is happening around the world by becoming a knowledge institution.
He listed key attributes for the central bank to become a knowledge institution and to operate at a higher level to transform knowledge to wisdom.
He said RBI should learn to manage policy in a globalising world, as the global and euro crisis have demonstrated.
It should be in a position to make intelligent, mature and balanced judgment; be open-minded; become a learning institute; generate knowledge, be open, communicative and consultative; opt for extensive outreach; take accountability seriously, as autonomy comes with accountability; think positive; and be driven by values and ethics.
Subbarao also RBI should have a code of ethics and follow it.