Brief
RBI Governor Warns Prolonged Stability May Spur Financial Risks
At a Delhi event, RBI Governor Sanjay Malhotra said extended stability could breed leverage and flagged geopolitical and climate pressures on the global financial system.
By Felo News Desk · Published
Reserve Bank of India Governor Sanjay Malhotra told an audience in Delhi on Saturday that while the world economy has shown resilience since the COVID‑19 pandemic, prolonged periods of financial stability can encourage excessive risk‑taking and leverage.
Malhotra warned that fading memories of past crises weaken prudence, urging policymakers and financial institutions to stay alert even when markets appear robust. He said the extended stability experienced in India and globally could create vulnerabilities if risk‑taking intensifies.
The governor also highlighted that the post‑Washington‑consensus international order, which has underpinned decades of globalization and economic integration, is under “considerable strain.” He cited geopolitical and geoeconomic fragmentation, strategic realignments, trade restrictions, recurring supply disruptions, rapid technological change and climate risks as interacting factors that could destabilise the financial system.
“Banking and financial stresses can build overnight, but they will take years to resolve,” Malhotra said, adding that central banks can no longer assess monetary and financial stability in isolation.
He concluded by urging continuous vigilance, noting that the combination of these risks demands coordinated monitoring and policy responses to safeguard global financial stability.
Key facts
- RBI Governor Sanjay Malhotra warned that prolonged financial stability can encourage excess risk‑taking. (news18.com)
- He said the international order that supported decades of globalization is under considerable strain. (news18.com)
- Geopolitical fragmentation, trade restrictions, supply disruptions, technology changes and climate risks were cited as interacting stressors. (news18.com)
Sources
- [1] news18.com — originally reported as “'Global Order Under Considerable Strain': RBI Governor Stresses Need To Stay Alert To Financial Risks”
