A new Indian film has made a central bank governor its hero. Governor, widely read as drawing on S. Venkitaramanan, the Reserve Bank of India’s 18th governor, restages the secret shipment of India’s official gold assets abroad to play improbably as a sovereign-balance-sheet thriller.
What follows is about the figure, not the film: who the governor is, how the part has changed, and why, in an emerging economy, the office has become a permanent crisis manager and the state’s last port of call.
US and UK governorships
Kevin Warsh, in the Federal Reserve’s chair, can be argued to be a reformer, a hawk, an institutional critic or an insider. Put the same figure in an emerging-market central bank and the questions turn existential. Can he refuse a government that wants lower rates? Defend a currency the world is free to leave? Be believed before the market opens? Reserve status lets persona become an argument and persona become collateral.
This matters more now because credibility has grown scarce. War, energy shocks, a strong dollar, heavy debt, impatient governments – all land on one office. And while the governor holds less formal power than the president or the finance minister, it is still the most exposed figure in the chain of confidence.
Before, the job stayed within its design and made invisibility a virtue. The Bank of England, so the lore goes, once disciplined the city with a governor’s raised eyebrow over a press release. Then the part grew. From custodian to oracle to rescuer, each holder was pushed past the charter, because the world kept handing office emergencies that the rulebook never imagined.
Emerging market economies
While the advanced-economy governor visits the crisis, the emerging-market governor lives there.
The obvious objection is that advanced-economy governors now face the same storms: inflation, energy politics, restless voters, a fiscal arm crowding the monetary one. That is true. The weather has converged, but the damage has not.
A shock to a reserve currency often drives money towards it; in a crisis, safety is a subsidy that the strong collect. The same shock in an emerging economy drives money out. The currency falls, prices climb and solvency comes into question. One central bank can print its rescue in a currency the world wants. The other owes in a currency it cannot print, often backed by the International Monetary Fund as the last external backstop.]
India in 1991 was this governorship in concentrated form. By the middle of that year, the country was weeks from default, reserves down to barely a billion dollars – two or three weeks of imports. Venkitaramanan, months into the job and governing as one government fell and another formed, chose another course. He oversaw the secret pledge and shipment of gold to stall, raising about $600m.
In India, a household pledges its gold only when nothing else is left; for the state to pledge its own was the plainest confession of how far it had fallen.
This is why the person, not only the institution, is decisive. In an advanced economy, credibility is more often inherited, banked over decades and there to draw on. In an emerging economy, it is more personal, earned again under pressure because institutional support was thin. When markets, treasury and politics have all run out of room, credibility collects in one chair.
Operational independence
Rangarajan, who ran the RBI in the years after 1991, stated plainly that a central bank must have operational independence. Law can grant that power but it cannot guarantee it. The IMF’s transparency code treats the office-holder’s own independence – how they are appointed, how long they serve, how they can be removed, how they are paid – as separate from the institution’s. The point it concedes is the right one: independence rests in the person, not only in the building’s letterhead. A central bank is only as good as its law, and in a crisis, only as good as the person the law lets act.
The claim now has evidence behind it. Bolhuis, Mano and Thorell tracked 132 changes of governors across rich and emerging economies since 2000. Where the change was political, interest rates fell, inflation rose – both expected and realised – and growth ticked up for a while.
Indonesia has just shown the live version. A 2026 law widens Bank Indonesia’s growth mandate and gives politicians new leverage over its board, including a path to removal. Independence is rarely abolished outright. It is quietly converted into coordination, advice and the power to dismiss.
Who is the governor really?
If the governor is the last port of call, choosing one is not a staffing decision. The question is no longer who is senior or who is loyal, but who can fight a fire, who can say no and whose word the market will trust at three in the morning. Independence can be hollowed without being repealed. The clause reads perfectly while the substance is gone.
Three things follow. First, the appointment of a governor in an emerging economy is a signal to markets, not a routine reshuffle. Second, legal independence counts for little without firm rules on how a governor is chosen and removed. Third, a growth mandate needs a clear order of priority, or it becomes the polite name for fiscal dominance.
So, the question the literature too often ducks are the one an emerging economy, and increasingly the advanced economy, can least afford to duck: not what the central bank is, but who the governor is.
It is that the saving now rests, more than the design ever intended, on the judgement of a single person – and on the care, or the carelessness, with which that person was chosen.
Udaibir Das is Vice Chair of OMFIF, Distinguished Fellow at ORF America, and Distinguished Visiting Faculty at the Kautilya School of Public Policy.
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