Ukraine, soaring crude prices seen as a risk to financial stability

MUMBAI: The Financial Stability Development Council (FSDC) headed by Finance Minister Nirmala Sitharaman on Tuesday discussed the possible impact of the situation in Ukraine and rising global crude prices, seen as a risk for financial stability. Besides that, the board also provided an update on the outcome of the actions of the US Federal Reserve.
In a subsequent interaction with the media, Sitharaman said that while there was a lot of talk about extreme volatility and global headwinds, no extraordinary measures were discussed. Sitharaman said it is very difficult to predict crude prices, which are currently approaching the $100 per barrel level. “We discussed that today when we were looking at the challenges to financial stability. Crude was one of the things… the concerning international situation, where we expressed that we wanted a diplomatic solution to the situation, and all these headwinds. Will watch over us,” she said.

The finance minister said market prices for fuel charged by oil marketing companies were based on their average purchase rate for the fortnight and they would take a call. Regarding the government intervention by lowering fuel taxes, she pointed out that the Prime Minister had announced a reduction before Diwali, which was followed by a similar decision by several state governments, which reduced the burden on citizens. “The government will come out publicly (with a decision) when they feel it is necessary to intervene,” she said.
The 25th FSDC meeting also brought together senior officials from the Ministry of Finance and all financial sector regulators including the Ministry of Commercial Affairs, Sebi, Indian Insurance Regulatory and Development Authority, ‘Regulatory and Development Authority for Pension Funds and the International Center for Financial Services. Authority.
A statement released by the government says the board noted that the government and all regulators must maintain constant vigilance over the financial conditions and operation of significant financial institutions, especially as this could expose financial vulnerabilities in the medium and long term. The board discussed the measures needed to further develop the financial sector and achieve inclusive economic growth accompanied by macroeconomic stability.
The board also discussed operational issues related to currency management. He took note of the activities undertaken by the FSDC Sub-Committee chaired by the Governor of the RBI and the follow-up given by the members to the past decisions of the FSDC.