Plans to use credit-to-GDP ratios to calibrate countercyclical capital buffers under Basel III put emerging economies at a disadvantage, Duvvuri Subbarao, the governor of the Reserve Bank of India, on Tuesday warned.
Subbarao acknowledged that the concept of countercyclical capital buffers "had an intuitive appeal." But India was, he said, concerned about the variable being mooted to calibrate the buffer.
"The most widely discussed candidate is the credit-to-GDP ratio. Using the ratio is, howeve