A few things the RBI should be mindful of before issuing own bonds

Another discretionary tool to manage liquidity may be a timely one

In view of the huge liquidity inflows into Indian markets, authors of the Report on Currency and Finance (RCF) that was published by Reserve Bank of India last week have an interesting proposal to manage the influx. RBI should be able to issue its own bonds to mop up the excess liquidity, the report argued.
 

Globally this is not new, as many global central banks like those in Switzerland, Japan and Sweden issued their own bonds to absorb liquidity in the aftermath of the global financial crisis.
 

Among emerging market economies, Bank of Indonesia pioneered the use of central bank