Most policy documents in India are littered with jargon that puts off the average reader. The Reserve Bank of India (RBI) is no exception to this unfortunate rule. The way language is used offers several clues to how an agency thinks. While RBI has not yet embraced the plain English movement, it seems the jargon it uses is very gradually changing.
For example, the monetary policy statement released on Tuesday talks about “tail risk”—which is technically the chances that a portfolio will decline by more than three standard deviations. This is part of the language of modern finance, and not of traditional central banking. RBI had talked about tail risk in an earlier policy statement as well.
Risk and volatility also get frequent mention. This is more Robert C. Merton than Milton Friedman. It tells us quite a bit how both the RBI and the Indian economy are changing. Financial markets are now more important than ever before.