Itis time now to take a serious view on converting gold into financial assets and save the economy from the present crisis.The gold hoardings in India run into thousands of tonnes and part of these if converted into financial assets can rescue the economy and put it back into growth trajectory. The easiest way is to go in for a Gold Bank and mobilise the gold hoardings against issue of bonds carrying reasonable rate of interest.The author's suggestion to allow the banks to keep the CRR balances in gold is good and can be easily tried which will help release some funds for expansion of credit.There are umpteen ways to make use of the gold lying idle in the economy and it is for the Reserve Bank and the Govt to take steps for the productive use of gold.Imports can be fully banned for a temporary period and the gold available in the economy should be brought into the market.Issue of gold coins by banks by importing gold can be replaced by issue of gold coins by using domestic gold.
from: Dr.T.V.Gopalakrishnan
(This was published in response to an article Gold Management a Policy challenge appeared in Business line dated 6/07/12).
Posted on: Jul 6, 2012 at 08:42 IST
