Financial Stability and financial repression
What is it about?
Some countries like India ensure financial stability primarily through the policy of financial repression. This can have large long-term cumulative adverse effect.
Why is it important?
Countries like India take pride in the fact that a major financial crisis has not occurred in India. However, it is not realised that such financial stability can come at high cost. There are reasons to believe that the high price is paid by the very poor who do not get adequate support from the government that spends in one way or another on ensuring macro-financial stability.
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