yandraduth googoolye : security and risk regarding the use of cards in mauritius keynote address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the launch event of visa card security week 2011, port - louis, 11 october 2011. * * * ladies and gentlemen it is an honour for me to be invited to this audience this morning to share my views on the security and risk environment regarding the use of cards in mauritius. electronic money is projected to take over from physical cash for a large part of small - value payments, and continues to evoke considerable interest both among the public and the various authorities concerned, including central banks. the electronic money developments raise policy issues for central banks as regards the possible implications for their revenues, implementation of monetary policy and payment system oversight role. indeed, it is by virtue of this very last role – maintaining the clearing, payment and settlement system that we take an interest in cards, in the broader context of maintaining financial stability. mauritians increasingly use cards to make payments. in recent years plastic cards ( credit, debit and other cards ) have gained wide acceptance and their use has become popular in the country. the total number of cards issued by banks and outstanding increased from 700, 000 as at end - june 2001 to 1. 3 million as at end - june 2011. likewise, the actual usage has registered increases both in terms of volume and value i. e. from 1. 6 million transactions amounting to rs 2. 4 billion at end - june 2001 to 4. 1 million transactions aggregating rs 7. 7 billion at end - june 2011. these figures are expected to increase even further with the initiative of some banks to provide prepaid cards to an even more sophisticated and demanding clientele. in view of such a widespread use of cards, issues relating to the regulation of this payment mode as well as those relating to customer protection assume considerable importance. the functioning of the card payment system should not present any risks to the payment and settlement systems in particular and to the country ’ s financial system in general. the use of cards is so entrenched in the habits of the population that a serious disruption that affects the entire card system, or large parts of the system, would have serious consequences for the ability of people to make payments. if card payments do not work, then the entire payment system will be disrupted. the bank ’ s responsibility for a safe and efficient payment system

ltd, hsbc, and barclays bank plc., were appointed primary dealers. the bank of mauritius had decided that traditional bidders for bills at the weekly auctions would be gradually cropped out. between february 2002 and november 2003 transactions by primary dealers with banks amounted to rs1. 9 billion. their transactions with corporate bodies amounted rs10. 8 billion. with individuals their transactions amounted to rs1. 6 billion. these give a total amount of over rs14 billion worth of bills transacted by primary dealers. this value of transactions in bills reflects the potential that exists for the trading of government papers on the stock exchange. so far the number of eligible bidders at the weekly auctions held at the bank of mauritius that are not primary dealers has been reduced from around 250 to 11. over time only the primary dealers will be eligible to bid at the weekly auctions. institutional investors like the national pension fund, the national savings fund and all the remaining banks and other financial institutions will be required to purchase government papers on the secondary market. this would definitely require major changes in the investment decision - making process within these organizations. they would stand to gain in the medium - term. sometime in may last i initiated discussions with mr. sunil benimadhu, mr. vipin mahabeersingh and mr. chota moollan at the bank of mauritius on our intention to sell treasury bills through brokers on the stock exchange. several meetings were since held with myself, the managing director and the staff of the financial markets department of the bank of mauritius. discussions were held with stock brokers also. a set of rules and procedures has been defined and was submitted for approval by the financial services commission. some six weeks back i had a stimulative exchange of views with the honourable minister sushil khusiram on this project. the swiftness with which the honourable minister made regulations to that effect reflects his personal commitment and determination for the development of the market for government papers. i am thankful to him for having supported this initiative. with hindsight the decision to sell treasury bills over - the - counter at the bank of mauritius was a decision taken in the right direction. i am happy to see that finally the trading of bills will soon take - off on solid foundation. the stock exchange of mauritius, the central depository & settlement co. and the brokers have put in lots of efforts in the project and i am confident that it will not suffer the