New Delhi: If Mumbai has to become an international financial centre, the government would have to allow foreign investments in government securities, create a currency spot market and set up an exchange for trading in currency derivatives.

In a report on `Making Mumbai an International Financial Centre'', a high-powered Expert Committee set up by the Government also suggested that foreign clients be allowed to buy unlimited rupee-denominated corporate bonds and those issued by sub-sovereign entities such as States and metropolitan administrations.

The report which has been submitted to the finance minister P Chidambaram, also said that the internationalisation of the rupee-denominated bonds would accelerate the emergence of Indian international financial centre (IFC) on the world stage.

The committee has made a case for immediate creation of a currency spot market, with a minimum transaction size of Rs 1 crore and accessible to all financial firms. The committee, largely comprising bankers, has suggested the creation of a rupee-settled exchange-traded currency derivatives market, with trading in futures, options and swaps on currencies.

The Committee has made a case for full capital convertibility to be achieved within a time-bound period of the next 18 to 24 months and by not later than the end of calendar 2008.

Moreover, the policy problems that have held back interest rate futures need to be rapidly resolved, the committee said.