Bank of Mauritius – Year in Review

The Governor of the Bank of Mauritius, Mr Rundheersing Bheenick, recently gave a statement where he reviewed the year gone by and reflected on the present and future outlook.

In his address Bheenick said that Headline inflation came down from 4.9 per cent in July 2012 to 3.6 per cent in June 2013 while year-on-year inflation stabilized, decreasing marginally from 3.7 per cent to 3.6 per cent. He also said the country has benefited from a steady flow of foreign direct investment, not far from previous highs, during the period.

Some of his insights from the past year included a description of how the bank has worked closely with the reserve bank of India to implement a framework to help fight Ponzi Schemes, which were becoming an increasing problem. The RBI team’s recommendations range from the reinforcement of Know Your Customer procedures and due diligence in banks, the setting up of dedicated cells to gather market intelligence, to enhanced coordination among regulators.

He also outlined the efforts being made to modernise the banking sector in Mauritius. To this effect they grated their 21st banking licence and encouraged foreign bank branches to convert into subsidiaries. They also considered the case of large and complex local banking institutions – an ever-present danger in a country where 65 per cent of bank assets are controlled by two banks and are in the process of putting up a framework for Domestic Systemically Important Banks, wherein stricter requirements including the imposition of capital surcharge will be applicable.

The Cheque Truncation System, introduced the year before, saw the end of physical exchange of cheques on the Bank’s premises on 31 January 2013 and the bank continued the process of modernising its statistical operations. They also launched their first polymer bank note after many years of planning and development.

Bheenick concluded his address by saying that as signs indicate that the global financial crisis is waning the role of a central Bank is maintain financial stability and they must continue to pursue reforms and develop drivers of growth.