Demonetisation hurt confidence |
India`s surprise move to abolish high-value rupee notes has undermined the central bank’s reputation for competence and independence, even as it remains a credible institution, Standard & Poor’s director Kyran Curry said .The comments from the global credit rating agency come as the Reserve Bank of India (RBI) and the government face criticism for their implementation of the demonetisation initiative in November, abolishing 500 and 1,000 rupee notes, which accounted for 86% of the currency in circulation.The slow replacement of the abolished bills has sparked a shortage of cash that has hit large parts of the economy, and the RBI and government have had to subsequently announce a series of ad hoc measures to ease the impact of the decision.Demonetisation has cast a shadow over the RBI’s competence and independence. However, he also noted that “we still think this institution is a very credible one, and in terms of the conduct of monetary policy, it’s a very mature institution”, Curry said.
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