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Learning from a Crisis

C.P. Chandrasekhar

By Y. Venugopal Reddy
Orient Blackswan, Delhi, 2011, pp. xxii + 421, Rs. 595.00

VOLUME XXXV NUMBER 8-9 August-September 2011

The Great Recession, which began with the financial crisis of 2007-08, though partially addressed, is still with us. Yet the expectation it generated, that given its severity it would trigger the implementation of measures aimed at reining in finance and pre-empting similar crises in the future, remains largely unrealized. This is substantially because many involved in debating the forms that new regulation should take have stakes in the financial system. The debate over regulation has become a way of ensuring that final outcomes do not harm their interests, rather than a means to working out a necessary and feasible system of regulation based on the experience leading up to and during the recession. Given that context, Yaga Venugopal Reddy, India's Central Bank Governor during the period when the events that led up to the crisis unfolded, and subsequently a leading commentator on the crisis and its implications for the future of finance, is in a unique position. He was and is, of course, an eminent economist. He also headed a central bank in a country that was located in a region (Asia) that was less affected by the crisis; that had fortunately not as yet proceeded down the road to financial deregulation to the extent that had happened in many developed countries; and that is seen as having been more prudent in the management of its financial system that remained dominated by banking. Based on his speeches, statements, writing and action he personally has been identified as an individual who exercised considerable caution, emphasized balance when regulating the financial system and implementing monetary and exchange rate policy. Given these circumstances he would be one among the policy makers with some influence on the direction the post-crisis debate should take, who can be seen as an informed, experienced and relatively disinterested observer. His speeches and writings on the crisis have therefore been followed with considerable interest not just in India but across Asia and the rest of the world. This book, the second of the volumes elaborating his views on the subject, is therefore more than a welcome addition to the large literature on the crisis that has been issued over the last few years. The book includes a set of lucid and extremely insightful essays that began life as lectures delivered at different fora on different aspects of the crisis and the lessons that can be drawn from it. Despite ...

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