At a time when the financial sector is being blamed for much of the global economic crisis, former governor of Reserve Bank of India (RBI) YV Reddy has said some global financial conglomerates are more powerful than even the central banks, as they also seem to be in a position to influence both political and corporate governance, to suit their own interests. “In the prevailing environment of global financial markets, some large global financial conglomerates are larger and perhaps, more powerful than some of the central banks,” Reddy said, while delivering the Per Jacobsson Foundation Lecture 2012 in Basel (Switzerland) on June 24. Reddy said since the international banks have the opportunity and incentive to conduct operations involving tax avoidance, these banks enjoy significant influence over the political economy in several countries. “Moreover, large global financial conglomerates seem to be in a position to influence not only political governance but also corporate governance, to suit their own interests,” said Reddy. Without naming any entity Reddy said some of the leading rating agencies and accounting firms enjoy an oligopolistic power over the markets. “The leading rating agencies and accounting firms, along with a few leading business news agencies, have continuous dealings with each other, which tends to reinforce the exercise of their oligopolistic power over markets,” he said. The former governor who was addressing on ‘Society, economic policies and the financial sector’ said the concentration of global financial power in a few entities with close mutual connections has considerable potential to undermine competitive forces. "Further, operations of international banks or conglomerates specializing in cross-border flows, combining traditional banking and risky investment banking operations, have close business and operational links with rating agencies, accounting firms etc," Reddy said.