and an administration department, the bank became officially operational on september 2, 1967. thus began central banking in mauritius, just over six months before independence in march 1968. barely two months through the business of central banking the bank faced its first tough challenge – a kind of challenge that any central banker used to feel extremely uncomfortable in the days of the bretton woods fixed exchange rate regime. great britain, under the then prime minister, harold wilson, devalued the pound sterling, to which the rupee was pegged at rs13. 33 by 14 per cent in november 1967. it was the first significant price shock to the mauritian economy after the establishment of the bank of mauritius. the bank had steered through successfully. governor aunauth beejadhur was tested right at the very beginning of his tenure of office. in 1971, major amendments to the bank of mauritius act were carried out. pressingly, a research department was created the purpose and objective of which was to conduct research and economic analyses and policy recommendations to the management. in 1974, herstatt bank, a privately owned german bank, went bankrupt in a famous incident that serves to explain settlement risks to students of banking and finance. as a result, the bank of england then decided to focus a lot more on regulation and supervision of financial institutions. that incident had paved the way for the basel committee on banking regulation and supervisory practices. at around that time, the bank of mauritius, one among the very few central banks in sub - saharan africa, having observed how the fringe crises in the early 1970s and the serious disturbances triggered by the collapse of herstatt bank, had set up an inspection division that eventually evolved into what is currently our supervision department. in 1979, because of a balance of payments crisis, mauritius adopted a stabilisation programme under a stand - by arrangement with the imf that lasted until august 1986. financial sector liberalisation, properly sequenced by the bank, initiated in 1983 was underway. once the stand - by arrangement with the imf was over an old paper on offshore banking ( written by me in 1980 ) that had been shelved was dusted off. the bank of mauritius act and the banking act were recast in 1988 with a view to accommodating the development of the first leg of an offshore financial sector. offshore banking, a project led almost entirely by the bank, was launched in august 1989 by the then prime minister, sir anerood jugnauth at the chance

face much vulnerability as we keep enhancing our regulatory and supervisory framework. we have even been commended by international institutions for the appropriateness of our policies, especially our exchange rate policy. so i have a number of reasons to feel satisfied and happy. most of all, i feel a sense of accomplishment with regard to my mandate. having said that, we are perfectly aware of the challenges that 2011 will bring with it and we have no intention of resting on our laurels. 54. dear stakeholders, at the beginning of a new year, when the world economy is on a two - speed recovery path – with advanced economies, our main partners, still recovering slowly, and the emerging economies bubbling along to the point of overheating, in some cases –, the global economic environment still remains very uncertain. our small and vulnerable economy is likely to suffer new strains and stresses. but i look at the future with cautious optimism. we have been able to stay the course at the height of the crisis and i am confident that we will be able to come out of it in pretty good shape. let us therefore harness all our resources and efforts to make things better for all of our fellow - citizens. i wish you all a very happy and prosperous new year. rundheersing bheenick bis central bankers ’ speeches