, face constrained choices regarding the composition of their reserves portfolio. as a result, they remain committed to liquidity and security constraints and their strategic asset allocation ( saa ) allows little room for esg - based holdings. other central banks with adequate levels of reserves may have more flexibility in diversifying their portfolio composition to ensure a reasonable dosage of esg - compliant holdings. usually, the incorporation of esg criteria by central banks falls under three categories : the first is negative screening which is the most widely used. it simply consists of excluding sectors or companies from the investment universe based on ethical, moral or scientific grounds, e. g., companies with poor environmental credentials. in our case, 2 / 4 bis - central bankers'speeches we have invested in an esg fund denominated in euro. as part of our internallymanaged corporate bond portfolio, we have adopted the negative screening and exclusion ( un sanction list ). the second category is thematic investing. this directs investment towards specific themes which are expected to improve risk - adjusted return and as well as bring along ancillary societal benefits. the third category is impact investing which is more results - oriented and which looks at policy outcomes alongside financial outcomes. to illustrate, some central banks have already taken steps to incorporate environmental sustainability considerations within their reserve management framework. progress on this front is varied. banque de france, banco de mexico, norges bank are pioneers in the fields. others are still at the beginning of the journey, as challenges persist. in the case of the bank of mauritius, in june 2021, the bank came up with a guide for the issue of sustainable bonds. the document provides an overview of the requirements and process for the issuance of sustainable bonds and the listing of these bonds on exchanges licensed in mauritius. it also seeks to ensure the integrity of the sustainable financing ecosystem in mauritius and to prevent inter alia " green washing ". according to the world bank, challenges are four - fold. first, a uniform definition of esg is still lacking. second, there is a lack of coherent and consistent accounting and reporting framework and disclosure requirements across jurisdictions. third, measuring the impact of esg considerations on financial returns is still inconclusive. fourth, monitoring progress and appraising performance is difficult in view of lack of availability of proper benchmarks. challenges tied to the process of gathering and analyzing data may also inhibit the smooth incorporation of esg considerations into an investment and asset allocation framework. ladies and gentlemen

reserves of mauritius stands at usd6. 93 billion as at today, representing 12. 6 months of imports of goods and services. 40. the bank has estimated that the country could lose, on a net basis, about rs58 billion in terms of foreign exchange earnings in 2020, mainly arising from revenue losses from tourism and exports of goods and services. 41. the bank estimates that mauritius has received nearly rs7 billion of gross direct investment flows as at end - august 2020. for 2020, it is projecting around rs10 billion of inflows. 42. viewed against various traditional reserve adequacy metrics and more rigorous methodologies used by the imf — notably with regard to imports, exports, broad money and short - term debt — the current level of reserves is assessed to be adequate. they provide a buffer against headwinds over the next few quarters. money market 3 / 5 bis central bankers'speeches 43. with regards to the money market, liquidity in the banking sector is adequate to support the accommodative monetary policy stance of the bank. the bank has been gradually bringing excess liquidity to a tolerable level. 44. outstanding bank of mauritius instruments stand at rs111 billion as at today, an increase from rs85 billion on 8 july 2020. 45. excess liquidity dropped recently as a result of the net issuance of bank of mauritius securities and regular interventions on the fx market. interbank transactions remained relatively low, as most banks have an excess rupee position. 46. several central banks had started reviewing their monetary policy framework, even before covid - 19 in a context of low interest rate and below - target inflation rate. given the current context and changing dynamics, the bank will bring up to date its monetary policy strategy. financial stability 47. bank loans to the private sector continue to rise, growing year - on - year by 5. 1 per cent in july 2020, from 4. 1 per cent in may 2020, the highest pace recorded since may 2019. annual growth in bank loans was supported by both households and corporate borrowings. 48. the capital and liquidity positions in the banking sector remain strong, well above the regulatory limits. the aggregate capital adequacy ratio was 19. 5 per cent as at end - june 2020, a 1. 3 percentage point improvement over march 2020. 49. the different measures taken by the bank have helped alleviate pressure on commercial banks ’ capital and liquidity positions, and ensured