Money on the markets

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from India Insight:

God and the central banker

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Can central bankers play god to the markets? India's central bank chief Duvvuri Subbarao does not believe so. In doing so, the Reserve Bank of India governor, a physics student, has taken refuge in quantum mechanics.

Subbarao takes the example of Einstein, who could not reconcile to the probabilistic nature of quantum mechanics all through his life.

Einstein famously said - "God does not play dice". Less known perhaps is the retort of his friend and mentor Niels Bohr who said - "Albert, stop telling God what he can or cannot do".

Subbarao draws this parallel in arguing that a central bank cannot tell markets what to do. "We have to take market signals as given," Subbarao said in New York at a recent IMF meeting.

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