Everyone may have some advise for the RBI. Some may advise, 'Cut your lending rates and raise the deposit rate.' How will a bank function? We take a medium term view. The bank has an 80-year-old history. I don't want to destroy it for a few decisions.
Interpretation
This quote emphasizes the importance of long-term stability over short-term fixes in banking.
Raghuram Rajan highlights the complexity of banking decisions where quick solutions, like altering lending and deposit rates, might seem beneficial but can jeopardize a bank’s long-term reputation and function. He underscores the need for a thoughtful, medium-term perspective, considering the rich history and stability of the institution.
In practice
During a financial seminar discussing banking strategies.
The U.S. should worry about the effects of its polices on the rest of the world. We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, broadly, rather than what is just right given the circumstances of that country.
Customers often value a good more when its price goes up. One reason may be its signaling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich.
The problem with forbearance is that it always looks like a good thing to do until it stops working.
Perhaps the hardest challenge has been to persuade the public, impatient for rapid growth, of the need to ensure stability first. Growth, it is argued, is always more important, regardless of the looming economic risks.
Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back.
The gap in India has always been between the promise and the execution.
Microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge, posing an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves.
Budget consolidation and economic growth are two sides of the same coin.
It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with 'free banking.' The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.
In our high-tech, high-skilled economy where low-skilled work is being scaled back, phased out, exported, or severely under-compensated, all the right behavior in the world won't create better jobs with more pay.
COMMERCE, n. A kind of transaction in which A plunders from B the goods of C, and for compensation B picks the pocket of D of money belonging to E.
Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually.
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