MUMBAI: Veteran banker Uday Kotak has said that central banks printing money for long can be harmful. Kotak, who had six months ago called upon the RBI to expand its balance sheet, said that printing money is only a short-term solution. Hinting at a need for normalisation, Kotak said in a tweet that central banks and sovereigns globally have one medicine for all problems — print money. This distorts value as well as values. “Like climate change, it is the future generation’s problem. We need to solve it, not kick the can. Future is here. Future is now,” said Kotak. In May, Kotak had called for printing of money as relief in the wake of the ferocious second wave of the pandemic. “If not now, then when?,” Kotak had asked. Explaining the change in stance, Kotak said in a subsequent tweet, “Six months back in May was a specific crisis of Covid 2.0, which needed a temporary ‘steroid’. Global policy makers are using the same medicine for ALL situations since 2008. A steroid taken for long is very harmful.” Kotak is the second senior banker to point out how surplus liquidity is distorting values. Last month, SBI chairman Dinesh Khara had warned that there is mispricing of credit risk due to surplus liquidity.

Source link