Tribune News Service
New Delhi, December 29
Though the economy has steadily gained momentum and remained resilient since the second quarter of the current fiscal, the Omicron variant of coronavirus remains the major challenge along with rising inflation pressures, says the RBI in its latest Financial Stability Report released on Wednesday.
The pace of recovery remains uneven across sectors, inflation formation is being subjected to repetitive supply shocks and the outlook is overcast with global risks, it said.
Admitting that inflation remains a concern as it is by the build-up of cost-push pressures, RBI Governor Shaktikanta Das has called for stronger supply-side measures to contain food and energy prices.
Global economic recovery too has been losing momentum in the second half of 2021 due to resurfacing of infections, supply disruptions and high inflation rates.
Though stress tests show that all banks would be able to comply with the minimum capital requirements even under severe stress scenarios, gross NPAs may increase to 8.1% by September 2022 under the baseline scenario and to 9.5% under a severe stress scenario.
On digital currencies, the RBI took special note of the US President’s Working Group on Financial Markets (PWG) which acknowledged the rise of market capitalisation of stablecoins and outlined recommendations to protect against prudential risks that have also been outlined by the Financial Action Task Force (FATF). They are predominantly used in the US to facilitate trading, lending and borrowing of other digital assets with market capitalisation of over $127 billion while trade in world’s top 100 crypto currencies has reached $2.8 trillion.
A stronger, sustainable recovery hinges on the revival of private investment and shoring up consumption, which unfortunately still remain below their pre-pandemic levels — Shaktikanta Das, RBI Governor
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