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By A Vasudevan
These are days of challenging global and domestic uncertainties. Global uncertainties are mainly associated with geopolitics of war, conflicts, and power playing out through an unpredictable imposition of tariffs. Importantly, the rates that vary country by country and goods-categories impact domestic sentiments and expectations on the road ahead. Domestic uncertainties arise as much from delays in policy interventions as from supply and demand-side factors. How does one then safeguard one’s wealth and balance asset holdings at such a time?
They should focus on reforms such as the ease of doing business, modalities in simplification of foreign exchange management, internationalization of the Indian rupee, labour, land and judiciary
An ordinary investor invests her surplus income in various assets and tries to optimize the combination of risks (R1), returns (R2) and ready liquidity (R3). Given the uncertainties, investors also add criteria such as the unknown anticipation of the economic policy frame, political stability, social cohesion and business/investment opportunities both at home and abroad.
Among the class of financial assets, cash, deposits, shares, government securities, pension funds, insurance and mutual funds are most understood. The new financial assets are digital and in some senses abstract. They now attract a number of economic entities, including trust funds and are on the radar of opinion makers and influencers. NGOs, temples, churches and mosques may also increasingly enter the market for digital assets and stock markets with demat accounts.
The documents should provide a clear indication of the processes that should be taken up to limit bureaucratic obstacles and ministerial overreach
The question is whether digital assets and stock markets gain at the expense of bank deposits or deposits with corporates or non-bank financial intermediaries. There is no definitive answer to this question. However, intuitively speaking, the upward shift in the valuation of digital assets and stock markets will be a consideration for most asset holders and a part of such heightened valuations may also get back to deposits after a short time lag.
In the absence of any regulation or official pronouncements on digital assets, a rise in issuance of rupee-based digital coins like the US dollar based ‘stable’ coins may not be ruled out, particularly that there is now interest in official circles in internationalization of the Indian rupee.
The question is whether digital assets and stock markets gain at the expense of bank deposits or deposits with corporates or non-bank financial intermediaries
If this happens, will there be international settlement of claims of such ‘stable’ digital coins issued in different countries under the aegis of an international payment and settlement infrastructure? If the answer is positive, then why not make a clear official statement about the state of the digital assets with particular reference to cryptos and CBDCs (Central Bank Digital Currencies) and ‘stable’ coins and other derivatives thereof?
There should be more documents that go beyond the area of public finance
The last monetary policy statement missed the opportunity to handle this matter. And the fiscal authorities have also not done enough to dispel the uncertainty about digital assets. Perhaps the Budget for 2026-27 will be used to deal with this issue as also other structural reforms relating to banking and financial sector and credit flows, where the RBI has announced a significant package of measures in October 2025.
One hopes the Reserve Bank will also come soon with the findings of its internal research on regulatory overreach in matters relating to bank competitiveness and credit flows. It is only then that the credibility of the monetary policy statement of October 01, 2025, will be secured.
NGOs, temples, churches and mosques may also increasingly enter the market for digital assets and stock markets with demat accounts
The tempo provided by the October statement of the Reserve Bank needs to be maintained by fiscal authorities as well. Budget exercises will take place as usual with a focus on tax rates and expenditure allocations. But there is now an urgent need to introduce some novelties on economy-wide reforms along with empirically worked-out research documents at the time of presentation of the Budget for 2026-27.
These documents should necessarily deal with the pending reforms in the three areas of public finance, namely public expenditures including the one on defence, taxation and debt management. There should be more documents that go beyond the area of public finance. They should focus on reforms such as the ease of doing business, modalities in simplification of foreign exchange management, internationalization of the Indian rupee, labour, land and judiciary.
Will there be international settlement of claims of such ‘stable’ digital coins issued in different countries under the aegis of an international payment and settlement infrastructure?
The documents should provide a clear indication of the processes that should be taken up to limit bureaucratic obstacles and ministerial overreach. Let the Budget announcement be entitled differently to indicate the Budget for 2026-27 and the economic reforms programme that throws light on the approach towards a ‘Viksit Bharat’.
(The writer is a former executive director of the RBI and presently an independent analyst)