The burden of combating recession through monetary stimulus will fall on central banks, Subbarao said addressing the Stern School of Business, New York University here.
“Over the last few months, fears of double-dip recession have resurfaced, and governments in advanced countries are locked in a policy logjam over the balance between short-term fiscal stimulus and long-term fiscal consolidation.”
“This has willy-nilly pushed central banks to the fore once again as monetary stimulus is having to bear the burden of being the first, and in some cases, possibly the only line of defence against recession,” he said.
Pointing out that the crisis has been an intellectual challenge in many ways, Subbarao said, “My own experience has been the real world problems are too complex to fit template solution of text books.”
Earlier speaking at the IMF meeting, Subbarao had said that “we are rapidly running out of time, and may therefore be running out of solutions”.
Fears of renewed economic crisis has been haunting the US, while in the eurozone the sovereign debt seems to be deepening, sending shock waves across the world economy.
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