Letters to the editor dated December 30, 2020

This refers to ‘Brexit Blues’ (December 30). The UK’s exit from the European Union will build some new trade barriers between the two. But both sides should be relieved that there is a deal at last. Though Brtiish nationals will no longer have unrestricted freedom to work, study or live in the EU or vice versa, both sides will have tariff-free access to each other’s markets.

As far as Indian companies are concerned, they may not face much of a challenge as they will not be required to change their standards for two different markets now. But in the services sector, India could potentially gain as the curb on free movements of professionals between the two markets will directly help Indian services companies and employees.

Noida

Apropos ‘Takeaways from a ‘coronised’ 2020’ (December 30). In 2020, the Covid-19 pandemic and subsequent lockdowns strengthened the positive role of the Internet in the service of humanity — it would have been impossible to combat the virus without the help of technology.

Generally ridiculed as sluggish and slow, our bureaucrats, medical staff, police, healthcare workers and others showed a stunning sense of duty.

The year was most severe on senior citizens confined to their homes for months together devoid of any kind of socialising. Those who suffered the pangs of losing their near and dear ones could not even give full expression to their emotions because of social distancing restrictions.

Pune

This refers to ‘Risk adjustment, key for bank solvency’ (December 30). While risks are indispensable in financial intermediation, banks are supposed to safeguard the interest of depositors, and therefore mitigation of risk through robust governance is of paramount importance. The efficient utilisation of resources is critical to optimise returns, credibility and strength, besides securing the indefatigable faith of the depositors and investors.

The confidence of the depositors and investors were shaken on account of the financial catastrophe that occurred recently in PMC Bank, YES Bank and some of the shadow banks. Lack of governance and surveillance efficacy on the operations of those institutions heightened the risks and adversely affected the stakeholders.

Sustaining a sufficient level of economic capital is essential to protect the interest of depositors and investors, besides to ensure the uninterrupted flow of credit facilities to needy segments of the economy. With the extensive use of technology in banking operations, managing the deployed funds is essential to keep assets generating income. The policies on business activities, control and supervision and management of human capital must be fool-proof and must be executed effectively to fend off frauds. It is vital to enforce discipline in the banking business to mitigate the inevitable risks.

Changanacherry

As Bitcoin prices rally amid regulatory concerns and stakeholders eye a viable sandbox approach, prospects of mining/trading in the ambiguous asset class threaten to impact the financial system. The advent of blockchain and promising breakthrough technologies can promote digitisation across various sectors.

However, it is important to launch a well-regulated virtual currency to develop the e-commerce segment in totality. A wide array of legal/regulatory challenges have impeded a feasible global application of digital currencies. Increased scrutiny of leading online platforms is mandatory to monitor political advertising, establish a collaborative approach and preserve promoter goodwill.

Moreover, prudence demands that judicial authorities and financial regulators are on the same page to boost standardisation, operational efficiency and market confidence. It is better to reimpose the blanket ban, if agencies can’t let go of the recurring fickle stance.

To permit or not to permit an entity other than the central-bank to issue andmanage a cryptocurrency is a repetitive dilemma and hardly a strategic approach, which only promotes uncertainty among potential investors in the asset class. A robust network or infrastructure is needed to attain monetary stability, hedge risks and facilitate market-presence before digital-instruments can be widely accepted by consumers.

Delhi

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