Every time the US Federal Reserve hikes rates, a subtle shock radiates outward: emerging-market currencies slide, borrowing costs rise and policymakers reassess their space for action. No formal command travels abroad, yet decisions in Washington shape choices in New Delhi, Jakarta and Nairobi. It is in this unequal monetary landscape that Ankur Bhatnagar and C. Saratchand’s 2025 book, Foundations of Money and Banking in India, must be read. Superficially a thorough guide to India’s monetary and banking institutions, the book probes a deeper question: how much monetary sovereignty can a developing economy actually exercise in a dollar-centered world?
Money is political, not merely technical
One of the book’s notable strengths is its insistence that money is embedded in social trust and state authority rather than being a neutral instrument. Their treatment of India’s 2016 demonetization illustrates this: rather than dismissing it as a simple policy mistake, the authors see it as a rupture in the social contract of money. Currency depends on belief in its stability; when that belief is undermined, losses fall unevenly—especially on poor workers and small businesses.
This perspective recurs throughout. Monetary policy is portrayed not as mechanical lever-pulling but as a practice shaped by power relations—between state and citizens, regulators and markets, and increasingly between national economies and the global financial system. Chapters on interest-rate setting are revealing: developing economies often calibrate policy in response to external “anchor rates,” most importantly the Federal Reserve’s. That reality implies domestic policy frequently reacts to global benchmarks. When the Fed tightens, emerging markets often must follow to avoid capital flight and currency collapse. Thus interest-rate choices can become defensive—aimed at preventing external disruption—rather than driven solely by domestic goals like growth or employment. Monetary sovereignty exists, but within externally drawn boundaries.
Inflation-targeting regimes, meanwhile, while promoting transparency and credibility, also function as signals to international investors: stability reassures global capital that policy will be predictable. The contrast with advanced-economy central banks is stark: core central banks can dramatically expand balance sheets, as after 2008, without immediate external constraint. Emerging economies rarely have that latitude. The formal rules of policy may look similar across countries, but the power embedded in them is not.
Banking reform amid global liquidity cycles
The book offers a clear, accessible institutional account of India’s banking reforms—from asset-quality recognition and recapitalization to insolvency and resolution mechanisms. It lays out how domestic institutions attempted to repair balance sheets and restore confidence, and explains nonperforming assets, recapitalization and resolution processes in practical terms.
But banking stress does not occur in a vacuum: global liquidity cycles shape domestic fragility. Abundant capital promotes credit growth and risk-taking; tightening exposes weak positions. While the authors document India’s domestic responses well, the international transmission mechanism could have been emphasized more. Asset crises in emerging markets frequently mirror shifts in global risk appetite and funding conditions.
A useful comparative thread contrasts India’s post-liberalization financial system with China’s state-led model. China’s state-owned banks often carry sectoral mandates aligned with industrial strategy; India’s reforms emphasized regulatory convergence and market discipline. The book analyses this divergence but treats the geopolitical pressures of integrating into a dollar-dominated system as background rather than foreground.
Fintech, crypto and the new frontier
Bhatnagar and Saratchand engage with fintech and cryptocurrency—issues that are reshaping payments, cross-border transactions and debates over monetary sovereignty. Digital currencies, alternative settlement systems and central bank digital currencies (CBDCs) have entered geopolitical discourse amid talk of de-dollarization.
The authors acknowledge these trends but do not fully integrate their geopolitical implications into the larger narrative about monetary hierarchy. Fintech and crypto are not merely technological novelties; they can challenge or entrench existing hierarchies. Digital payment infrastructures can lower costs and expand access, but they may also intensify surveillance and market concentration. CBDCs raise complex questions: might they afford emerging economies more autonomy, or simply bind them more tightly to global standards and infrastructures? The book raises these questions but leaves them only partially explored.
Why a cautious critique matters now
Perhaps the most valuable aspect of the book is its restraint. It avoids manifestos and sharp polemics, opting instead to map institutions, policies and debates carefully. Readers seeking bold normative prescriptions may find the tone conservative, yet there is merit in this moderation: by laying out the architecture of India’s monetary and banking system without hyperbole, the book lets the contours of constraint emerge clearly. The limits on policy space, the disciplining effect of capital mobility and the asymmetry of currency hierarchy become visible precisely because they are not overstated.
The international monetary system faces renewed uncertainty. Geopolitical tensions, debates about reserve-currency status and tighter global liquidity have revived questions many assumed settled: who controls money, who absorbs risk and who sets the boundaries of economic choice? Foundations of Money and Banking in India does not supply definitive answers. What it does, usefully, is remind readers that these questions are alive and materially shape everyday policymaking in emerging economies.
For a global audience, the book offers more than a national case study. It is a window into how a large developing economy tries to balance credibility with growth, stability with development and autonomy with vulnerability. Money, the authors stress, is never merely technical; it is a site of power. Recognizing that power is the first step toward questioning it.
