Question

1. It has been reported in the international financial press that Mr. Raghuram Rajan is one of the top candidates to follow the current Governor of the bank of England Mr, Mark Carney when his term of office ends at the end of this year. i- Please compare a- the educational background b- professional experience c- and prominent professional achievements of the two gentlemen, ii- Please point out the three most important qualities that a central bank governor should possess that you have identified during your research of the two gentlemen

Answer 1

(i) Raghuram Rajan has completed his bachelor's in technology from Indian Institute of Technology. Thereafter, he joined Indian Institute of Management to complete his MBA. However, again he enrolled himself at Sloan School of Management at Massachusetts Institute of Technology to complete his doctoral degree.

Mark completed his bachelor's degr e from the University of Harvard, then later on completed his Master's and doctoral from Oxford University.

(ii) Raghuram Rajan started his career as an Assistant Professor in the University of Chicago. He later joined the International Monetary Fund to become one of its policy advisers. He later joined as an Economic Adviser for the Government of India. Thereafter, he joined the Reserve Bank of India as it's Governor.

Carney has spent the major years of his career with the Goldman Sachs. Thereafter, he joined Bank of Canada, only to join a year later Federal Department of Finance. He later on became the Governor of Bank of Canada. Later in 2012 he joined Bank of England as it's Governor.

(iii) The prominent professional achievements of Raghuram Rajan would be as a Governor of RBI he brought down the retail inflation rate from 9.8 to 3.78%, the lowest since 90s. Under him two universal banks were given license, and approved payment banks to increase financial inclusion. At IMF he worked for integrating financial sector analysis.

It is said Carney's major actions resulted in not affecting the financial crisis of 2008 at Canada. Canada's economy outperformed among its peers. When Carney joined Bank of England, he warned UK about Brexit and how will that impact UK's economy.

The three important qualities a Reserve Bank Governor should possess will be as follows;

1. They should forecast the economy, so that it can be saved way ahead of recession or any unforeseen circumstances.

2. They should not be biased with any political party and should have an opinion of their own.

3. They should work for financial inclusion.