Global economy not out of the woods yet, says RBI Governor Shaktikanta Das

Shaktikanta Das_RBI_Reserve bank

Reserve Bank of India (RBI) Governor Shaktikanta Das on August 3 said the global economy is showing some signs of recovery but the problems aren't over yet.

"While there are signs of recovery, we are not yet out of the woods," said Das speaking at the 21st FIMMDA-PDAI Annual Conference on Tuesday.

Global economy suffered a jolt with the onslaught of the COVID-19 pandemic. The crisis isn't over yet.

Noting that the sudden shock delivered by the pandemic called for swift and
decisive policy responses, Das said central banks across the globe responded by lowering interest rates, expanding their balance sheets through largescale purchase of government securities (G-sec) and other assets and injecting vast amounts of liquidity into the financial system.

“Many central banks also implemented measures targeting specific market segments that were witnessing heightened stress. These measures were, in many cases, complemented by regulatory relaxations (lower capital and liquidity requirements) aimed at supporting credit flow from banks and other financial intermediaries and at stabilizing the financial system and restoring confidence in financial markets,” Das said.

To fight the COVID, the RBI too had unleashed a raft of measures to lift the faltering economy. This included an array of liquidity measures and loan restructuring facilities to help the stressed borrowers. In addition to this, the RBI also offered a moratorium facility on all term loans during the first wave of the COVID.

Through various measures, the Reserve Bank completed the borrowing programme in a non-disruptive manner and also created congenial conditions for other segments of the financial market such as the corporate bond market, Das said.

“The stabilisation of credit spreads across the rating ladder resulted in issuances of corporate bonds to the tune of Rs7.72 lakh crore in 2020-21,” Das said.