The government is working on strengthening the Financial Stability Development Council (FSDC), the regulatory mechanism for coordinating the various financial sector regulators, so that it can act as a "war room" in times of global financial meltdown as witnessed in 2008, finance minister P Chidambaram said yesterday.
"We are working to strengthen the data bases and technical capabilities of FSDC so as to make it a full grown systemic risk agency... If we face a situation back like 2008 again the FSDC will be war-room," he said at an event.
The minister said the FSDC, set up in 2010, has improved the communication between all the regulators and plans are afoot to set up the financial data management centre.
The FSDC, headed by the finance minister, coordinates the work of various financial sector regulators, including RBI, SEBI (capital markets), IRDA (insurance) and PFRDA (pension).
Chidambaram said there is a need to improve the mechanism to deal with systemic risks in the light of the financial market meltdown that most affected emerging markets following the collapse of Lehman Brothers in 2008.
"Contrary to popular perception, the government and Reserve Bank together worked closely at that time. These experiences have motivated much soul searching on the subject of systemic risks," he added.
He said there is a need for strengthening the bond and currency derivatives market to deal with systemic risks in future.