Emerging Economies Need Greater Influence in Global Financial Institutions, Says RBI Governor

Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the Macro Week 2024 event in Washington, urging global organizations like the International Monetary Fund (IMF) and the World Bank to grant emerging economies a more significant role in their decision-making processes.

Das emphasized that these institutions must improve access to resources and allow emerging economies a stronger voice in governance. He said, “Enhanced access to resources and a stronger role in the governance of institutions such as the International Monetary Fund (IMF) and the World Bank will not only enhance the legitimacy of these institutions but also foster more serious global cooperation in addressing macrofinancial challenges.”

Highlighting the need for reforms, Das pointed out that the international financial system must evolve to meet the challenges faced by emerging economies. He stated, “The first and foremost priority should be accorded to reforming the international financial architecture. This involves prioritizing inclusive global governance frameworks that better reflect the realities of today's global economy.” He added that the existing system, while important, needs to adapt to ensure equitable representation for emerging economies.

Concerns Over Global Financial Vulnerabilities The RBI Governor expressed concerns about the structural weaknesses within the global monetary and financial systems, noting that recent events have revealed vulnerabilities affecting both advanced and emerging markets. He highlighted the urgent need for enhanced global financial regulations to address the risks associated with private capital flows and the increasing influence of non-bank financial intermediaries.

“There is indeed a pressing need to improve global financial regulation to manage systemic risks posed by private capital and non-bank financial intermediaries, which now hold significant portions of global assets,” he said.

Call for Stronger Financial Stability Framework Das also warned of the potential risks linked to the rise of shadow banking, fintech, and decentralized finance, which have added complexity to global finance. He called for a robust regulatory framework to prevent possible contagion effects, asserting that financial stability should be regarded as a "global public good."

Addressing the impact of geopolitical tensions on global economic policies, Das noted that actions such as sanctions, trade restrictions, and supply chain disruptions contribute to economic fragmentation. He recognized the importance of securing supply chains in vital sectors, including energy and strategic materials.

However, he stressed the need for cooperation, stating, “The G20 must play a key role in preventing further economic fracturing by promoting open and rules-based trade systems.” He advocated collaboration in technology transfer, investment in global public goods, and progress in the green transition.

Governor Das highlighted the crucial role of the G20 in fostering unity and preventing widening economic divides, suggesting that inclusive and balanced reform of the international financial architecture is essential for global stability.

RBI Governor Shaktikanta Das: Vigilant Amid Rapidly Changing Global Conditions

IMF Retains India’s GDP Growth Forecast at 7%, Warns of Global Risks

Global Debt Crisis Reaches $100 Trillion Mark, IMF Urges Action