Raghuram Rajan Current Affairs - 2020

22nd Financial Stability and Development Council meeting chaired by Finance Minister

On May 28, 2020, the Union Finance Minister Nirmala Sitaraman chaired Financial Stability and Development Council meet.

Highlights

The meeting reviewed current domestic and global economic situation, financial vulnerabilities issues, liquidity of Micro financial institutions, Non-Banking Financial corporations, regulatory responses, etc. The council noted that COVID-19 posed a great threat to the global financial system and the timing of recovery is uncertain.

About the Council

The financial stability and development council is an apex body constituted by GoI. The idea was mooted in 2008 by the Raghuram Rajan Committee. The Council was set up in 2010 by the then Finance Minister Pranab Mukerjee.

The council composes of Governor of RBI, chief economic advisor, secretaries and chairman of SEBI (Securities and Exchange Board of India), IRDA (Insurance Regulatory and Development Authority), PFRDA (Pension Fund Regulatory and Development Authority), IBBI (Insolvency and Bankruptcy Board of India). The Finance Minister chairs the meeting.

Functions of the council

The Council deals with issues such as financial sector development, financial stability, inter-regulatory coordination, financial inclusion, financial literacy.

Apart from these, the council also coordinates with India’s International interfaces such as Financial Action Task Force. The Financial Minister has powers to change the functions of the council from time to time. Currently, the council is working to deal with financial issues created by COVID-19.

Kristalina Georgieva appointed as new IMF chief

The Bulgarian Economist Christina Georgieva was appointed as the new head of the International Monetary Fund.

Kristalina Georgieva

Kristalina had served as Chief Executive in World Bank as well. Before becoming CEO of the bank in 2019, she had served in number of top positions in the Bank since 2008. In 2014, she served as Vice – President of European Commission. She had run the post of Secretary – General at the UN for a very short duration. Her tenure ended following a vote at the UN Security Council where Antonio Guterres gained its support.

She began her career at the World Bank in 1993. Her works and coordination towards disaster around the world in 2010 were applauded. It included floods in Pakistan, earthquake in Haiti and Chile, industrial accident at Ajka, Hungary and Romanian floods.

Awards

Georgieva was named “European of the year” in 2010. She was also awarded “EU Commissioner of the year” for her handling of humanitarian crisis in Pakistan and Haiti.

Responsibilities of IMF Chief

The responsibilities of IMF chief are defined in IMF’s Article of Agreement. According to the article, the chief shall coordinate the operating staff and the funds of IMF under an Executive board. He or she is responsible for appointment and dismissal of the staff of the Fund.

Selection Process of IMF Chief

The IMF chief is appointed by a 24 member Executive board. It is completely merit based. The directors of the board were allowed to file nominations for the post till 2011. After 2011, the appointments were based on managerial, diplomatic and professional skills of the director.

Indians in IMF

Indian born Gita Gopinath was the first Indian woman to hold a higher position in IMF. She joined IMF in 2018 as a Chief Economist. Before her the Ex – RBI chief Raghuram Rajan was the first Indian to hold the position of Chief Economic Advisor in the IMF.

Reports published by IMF

IMF publishes 2 major reports (1) World Economic Outlook – It is published biennially. It gives an overview and detailed analysis of the world economy by considering the issues of industrial countries, economies in the mode of transition and developing countries. (2) Global Financial Stability Report – It is also published twice a year. The report assesses stability of global financial market and emerging markets.

About IMF

IMF is an international organisation headquartered at Washington DC. It consists of 189 countries. IMF works towards global monetary cooperation, facilitates international trade and secures financial stability. It was formed in 1944 at the Bretton Woods Conference.