Harvesh Seegolam: Celebrating the 55th Anniversary of the Bank of
Mauritius - adapting to our future
Address by Mr Harvesh Seegolam, Governor of the Bank of Mauritius, at the
Governors' Meet, Le Morne, 8 September 2022.
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A very good morning to all of you.
It is with immense pleasure that I welcome you today to mark the 55th anniversary of
the Bank of Mauritius.
We have come a long way since the Bank was officially opened on the 1st of
September 1967. I feel privileged to continue the tremendous work that my
predecessors have accomplished for this apex institution which has always been at the
forefront of our economic trajectory.
To commemorate its 55th anniversary, the Bank launched the Emerald Jubilee Bond on
18 July 2022. I am pleased to share with you that, as of yesterday, a total amount of
Rs6 billion has been invested by individuals. This is indeed a success beyond our
expectations.
Ladies and Gentlemen
I will now highlight a few achievements of the Bank of Mauritius.
You will all agree with me, that the world is a changed place since 2004 and we need to
gear up to ensure that we continue to stay ahead of all disruptions and revolutions the
central banking world is facing.
In this light, updating our legal framework is key to adapting to evolution. We have
already progressed significantly on our proposed new Bank of Mauritius
Bill. Engagements are under way with the IMF for their views also. We intend to
submit a final draft to Government for consideration in October.
Ladies and Gentlemen
The hallmark in the evolution of the Bank of Mauritius has been its institutional strength.
During the five and a half decades of its existence, the Bank has regularly come up with
well-crafted policies. In difficult situations during the post-independence history of
Mauritius, these policies have fostered macroeconomic stability.
More recently, since 2020, with the onset of the pandemic, we all as central bankers
were faced with completely unprecedented situations and shocks which halted our
entire day to day. Problems and issues lying on our tables were of a magnitude and
complexity we had not seen in living memory. Central banks had to be bold in their
actions and decisions, while maintaining independence as monetary authorities. Being
independent gives central banks autonomy for policy making to sustain macroeconomic
stability, and to attain this very objective they had to look in the same direction as their
governments to salvage the economy during the pandemic.
We had to safeguard and ensure the continuity of our financial systems, such that
citizens do not lose trust in our banking systems. Though the pandemic and successive
shocks had different implications for our respective economies, the goal was to
minimise economic scars to protect individuals, households and corporates alike. There
was no one-size-fits-all solution as each country has its own specificities and, therefore,
solutions had to respond to economic realities on the ground.
In this vein, the Bank of Mauritius rolled out a series of timely, tailor-made and bold
measures which protected our financial system. The Bank of Mauritius COVID-19
Support Programme included both conventional and unconventional, but very
necessary, measures.
After taking office in March 2020, my biggest concern was to preserve and protect the
banking system. To do so, we had to launch a series of measures to avoid any
contagion to the banking system from macrofinancial turbulences. We were
concurrently faced with a decline in returns from investments of our foreign exchange
reserves. Faced with these elements, we had to rapidly deploy appropriate measures.
When I look back now, I can confidently affirm that the measures have reaped the
expected results. The banking system has successfully weathered the crisis unscathed.
Also, our foreign exchange reserves have remained at a level that satisfies any
adequacy metrics, even the most stringent ones. Today we stand at 15 months of
import cover.
Furthermore, as inflows of foreign exchange plummeted - especially with the tourism
sector coming to a halt during of the pandemic - the Bank has intervened and sold a
total amount of USD3.3 billion to the market up to now. The sheer size of our
intervention helped to contain unwarranted excessive volatility in the exchange rate.
The proactive approach adopted by the Bank has saved jobs, prevented economic
scarring and preserved financial stability. As a prudent central bank, we have unwound
most of the support measures by June 2022. We are now rising from the crisis with the
production structure almost unscathed, though we are still battling with other challenges
- such as high inflation and uncertainties for the global economic outlook.
Ladies and Gentlemen
To ensure the Bank of Mauritius fulfils its responsibilities effectively, I have launched
several initiatives since I joined the Bank in challenging times in March 2020.
Before this year is out, the Bank will replace its current monetary policy framework -
dating back to 2006 - with a new forward-looking, flexible inflation-targeting framework
adapted to the realities of today for the Mauritian economy. The new framework will
enhance the effectiveness of monetary policy, with an improved transmission
mechanism. At the same time, the Bank is enhancing its surveillance of risks to
safeguard financial stability, complemented by a comprehensive macroprudential
surveillance and policy toolkit.
Ladies and Gentlemen
Central bankers are today faced with - if I may say so - traditional challenges as well
as new disruptions taking place in the economy and in the global financial architecture.
We are already seeing the impact of climate change on the economy and financial
system in several parts of the world. Technology is also constantly disrupting the
delivery of and access to financial services. Central banks are having to grapple with
these challenges in a rapidly-evolving environment.
The Bank of Mauritius has been proactively working on these fronts with concerned
stakeholders. This led us to establish the Bank of Mauritius Climate Change Centre in
October 2021. The Centre is working towards integrating climate-related and
environmental financial risks into the Bank's regulatory, supervisory and monetary
policy frameworks, while supporting the development of sustainable finance.
Along the same line, digitalisation of the financial sector has remained high on my
agenda. The Bank is well engaged in this exciting journey to harness the potential of
technology in the digital transformation of our financial landscape.
CBDCs are today a near reality for many central banks in the region and
internationally. In Mauritius, we are looking forward to the pilot run of our Central Bank
Digital Currency - the Digital Rupee - that may transform our currency and payment
ecosystem in the years to come.
I therefore here wish to make a plea to my fellow central bank Governors, both present
physically with us today and those who have not been able to make it due to their prior
engagements, for us to join hands together for the elaboration of a regional model using
CBDC with a view of improving cross-border payments. Many regions across the world
have deployed same and we have to be at par also.
I also make a plea for central banks in the region to collaborate in other key areas
where we can tap the expertise of one another.
Ladies and Gentlemen,
I also launched an initiative in July 2020 to chart the path for the future of banking in
Mauritius. The banking sector plays a prominent role in the economic landscape of any
country. But it is called upon to adapt and even undergo transformation to be future
ready. It has become imperative to enhance its resilience, whilst also be more
innovative.
Conscious of the significance of this task, I initiated a deep industry-wide reflection to
devise a strategy for the banking sector in Mauritius going forward.
I have to express my appreciation to the Mauritius Bankers Association and the CEOs
of banks and other stakeholders for their unflinching support in developing the roadmap.
This roadmap translates the vision and strategic objectives for the banking sector into
an actionable plan. The key initiatives in the roadmap focus on the domestic market,
the global business strategy as well as products and services. The fundamental factors
that will support the sustained expansion of the banking industry - such as the
regulatory framework, ESG, and capacity development - are also at the forefront of the
strategy.
I thank the Oliver Wyman team present here with us today which has relentlessly
engaged with stakeholders locally and globally in crafting this report. Going forward,
the Bank will ensure the execution of this roadmap in close collaboration with the
banking industry and other stakeholders.
In a few moments, we will have the privilege to see the Honourable Prime Minister
launch the report on the Future of Banking in Mauritius.
Ladies and Gentlemen
I have set the scene for what the Bank has in store for the coming years. These strides
will contribute to boost confidence in the banking and financial system as well as
unleash greater opportunities for the Mauritian economy.
Over the next two days, we will have the opportunity to discuss many of these themes
in greater depth and listen to expert views.
Before I conclude, I wish to express my gratitude to the Honourable Prime Minister and
also to the Honourable Minister of Finance, Economic Planning and Development for
being among our midst today to mark the Bank's Emerald Jubilee.
Last but not least, I thank all Governors and representatives of central banks who have
joined us to mark this momentous occasion. We look forward to working closely to
adapt ourselves for our future.
On behalf of the Bank of Mauritius team, I wish to thank you all for your presence today.
Thank you for your attention.