India’s Mohan: regulation to tackle procyclicality of banks funding

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Regulation needs to reflect appropriately the price of funding liquidity on financial institutions' balance sheets to ensure that the market does not rely excessively on the central bank's emergency liquidity support facility, said Rakesh Mohan, a deputy governor of the Reserve Bank of India, in a new paper.

He said that regulatory policies should focus on the following areas:

• Improved funding risk management by strengthening risk management and governance and control;

• The introduction of

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