....... DMO within a banking regulator can create a perverse incentive for the regulator never to allow the economy to move away from financial repression as it can achieve both objectives of low-cost funding for government and reduction in banking sector risk through a requirement like a high Statutory Liquidity Ratio (SLR) as in India. The discussion on an independent DMO in India has been in progress since RBI proposed it in RBI Annual Report, 2000-01. It said: “The separation of the functions of debt management and monetary management is regarded as a desirable medium-term objective... The separation of the two functions is expected to have significant effects on the functioning of the government securities market.........
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