Mumbai: A top RBI representative has stated that Indian economic system is vulnerable to instability produced by return inflows and fluctuations in oil costs but establishment of Stabilization Fund may not be the accurate step under the recent situations.

Dr. Y. V. Reddy (Yaga Venugopal Reddy), Reserve Bank Governor told that several specialized persons have indicated that India should think about establishing a wealth fund on the lines of either a Stabilization Fund or a Sovereign Wealth Funds (SWF).

While talking to the Foreign Exchange Dealers Association of India (FEDAI), Reddy said, “There is no serious consideration of setting up a stabilisation or sovereign wealth fund.”

Sovereign Wealth Funds (SWFs), generally refer to special purpose investment vehicles, produced to handle national savings to create higher returns. In general, SWFs are made amongst existing account excesses when the foreign exchange reserves reach a level higher than sufficient height.

Various specialists have suggest that such a fund will aid India tide over the financial troubles growing out of rising worldwide oil prices and export procedure But Reddy sounded out that the condition does not justify it currently.

The RBI Governer said, “If and when we decide to set up these funds we have to put in place measures of governance, transparency and accountability, which would provide the necessary comfort.”