Argentina Returns to Capital Controls

By Kavaljit Singh | Briefing Paper # 28 | September 4, 2019

On September 1, the Argentine government led by President Mauricio Macri imposed capital controls in a bid to stem the fall in the foreign exchange reserves and the peso currency. This unexpected move was initiated soon after the authorities spent nearly $3 billion of forex reserves to repay short-term debt and to protect the value of the peso.

The announcement followed the Macri government’s unilateral decision taken on August 28 to delay repayment of short-term debt instruments (denominated in both US dollar and peso) to maintain liquidity in the financial…

India’s Shadow Banking Crisis is Intensifying

By Kavaljit Singh | Briefing Paper # 27 | August 28, 2019

The ongoing liquidity crisis in India’s shadow banking sector is intensifying. The troubles that started with defaults by Infrastructure Leasing & Financial Services Limited (IL&FS) last year are far from over as the sector continues to face a severe liquidity crisis. If tight liquidity conditions persist over the next three quarters, it may turn into a solvency issue for several shadow banks.

After the IL&FS collapse, the entire sector is facing a crisis of confidence as investors are shying away from investing in securities issued by shadow banks. Several shadow…

Crisis gives India the Chance to Clean Up its Shadow Banking Sector

By Kavaljit Singh | Letter (FT) | July 5, 2019

Further to your report “India’s shadow banking crisis sparks credit crunch” (, July 3): even more worrisome is the danger of the ongoing liquidity squeeze in the shadow banking sector turning into a more serious solvency issue. Several liquidity-starved shadow banks have already initiated the sale of loan portfolios and assets to meet repayment obligations.

As shadow banks are the largest net borrowers of funds from the financial system with a substantial part of funding coming from banks, mutual funds and insurance companies, the failure of a large shadow bank…

India’s Shadow Banking System is Facing an Imminent Crisis

By Kavaljit Singh | Briefing Paper # 26 | June 14, 2019

India’s shadow banking system is in deep trouble. An imminent crisis has been slowly but surely brewing in India’s shadow banking sector for the past one year. The first signs of trouble in this sector emerged in June 2018 when Infrastructure Leasing and Financial Services (IL&FS) – a major non-banking financial company – defaulted in payment obligations on inter-corporate deposits and commercial papers worth Rs 4.5 billion.

Thereafter, a string of defaults by IL&FS group’s subsidiaries on bank loans, short-term deposits, and commercial papers during July-September sparked turbulence…

The EU’s Proposal for WTO Modernisation: A Critical Assessment

By Biswajit Dhar | Briefing Paper # 25 | June 12, 2019

In June 2018, the Council of the European Union gave the European Commission a mandate “to pursue WTO modernisation in pursuit of the objectives of making the WTO more relevant and adaptive to a changing world, and strengthening the WTO’s effectiveness”. A few months later, a group of 13 countries, which also included the EU, unveiled a process for WTO reform for “developing 21st century trade rules at the WTO”.

Couched under these broad-brush objectives lay the intent to alter the focus of the WTO fundamentally, to make the multilateral…