Strengthening fundamentals combined with prudent fiscal management can make emerging market economies more resilient, Reserve Bank of India Governor Shaktikanta Das said on Tuesday.
“Emerging market economies’ resilience will be tested in the face of frequent new challenges, but the most important lesson is that in today’s uncertain world, strong fundamentals are the best buffer against global spillovers,” Das said in a speech at the “Central Banking in the 21st Century: A Changing Paradigm” event in Nepal.
Currently, the Indian economy is experiencing significant improvement in macroeconomic fundamentals and buffers, he said.
Das said severe climate-related events, geopolitical turmoil, increasing adoption of technology, fintech innovations, and artificial intelligence are some of the major challenges for central banks in the 21st century.
He said climate change and geopolitics could act as supply shocks, increasing inflationary pressures and slowing global growth and trade, while innovation and artificial intelligence could help improve productivity and reduce costs.
