Question

Which mechanism did India operationalize in 2024 to strengthen regional financial resilience within SAARC?

• A. SAARC Development Fund capital increase
• B. SAARC Currency Swap Framework (2024-27)
• C. SAARC Trade insurance Scheme
• D. SAARC Sovereign Credit Pool

Answer 1

Answer:

B. SAARC Currency Swap Framework (2024-27)

• The SAARC Currency Swap Framework for the 2024-2027 period serves as a critical instrument to ensure financial stability among member nations by providing a backup line of funding.

• This mechanism is designed to address short-term balance of payment difficulties and temporary liquidity shortages in the foreign exchange reserves of member countries.

• It functions by allowing central banks within the SAARC region to access a pre-agreed amount of USD, EUR, or Indian Rupee (INR) in exchange for their own local currency.

• The framework is managed and facilitated by the Reserve Bank of India (RBI), which acts as the primary lender of last resort for the regional grouping under these arrangements.