yandraduth googoolye : cross - border regulation in relation to digital assets speech by mr yandraduth googoolye, governor of the bank of mauritius, at the adc global blockchain summit, adelaide, 27 march 2019. * * * the honourable steven marshall, premier of south australia major general the honourable michael jeffery, forum patron excellencies ladies and gentlemen all protocol observed 1. introductory remarks it is a great pleasure for me to be in the midst of such an august gathering today. first of all, i would like to thank honourable steven marshall mp, premier of south australia for the invitation to attend this summit 2019 and share my thoughts, as a central bank governor and regulator of the banking sector in mauritius, on cross - border regulation of digital assets. i would also like to thank loretta joseph, fintech adviser to the oecd, for having facilitated my participation to this summit. 2. fintech and digital assets and central bank digital currencies fintech and digital assets are areas that the bank of mauritius has been following closely. the international community has also shown keen interest in this sector. the financial stability board ( fsb ), financial action task force ( fatf ), international monetary fund ( imf ), bank for international settlement ( bis ) and fellow foreign international standard setters and regulators have shared their thought, concerns and recommendations regarding fintech and digital assets. we must obviously distinguish between digital assets and central bank digital currency. while the latter are usually created and issued by central bank and is legal tender, digital assets, on the other hand, are not “ legal tender, and are not backed by any government or public authority ” as the basel committee on banking supervision clearly puts it. the fatf recommends countries to consider virtual assets as “ property, ” “ proceeds, ” “ funds ”, “ funds or other assets, ” or other “ corresponding value ”. ” 3. the need to regulate digital assets history has shown that regulatory gaps or vacuum have contributed to perpetuate fraud, led to financial crisis and undermined confidence in the financial services sector, amongst others. the bis, in its september 2018 quarterly review, reported that news pointing to the establishment of legal frameworks tailored to cryptocurrencies and initial coin offerings coincide with strong market gains. 1 / 5 bis central bankers'speeches there is need, therefore, for digital assets to be regulated. indeed, regulation brings legal certainty, legitimacy, trust

but also to avoid the unwarranted impact on export industries, particularly of goods which tend to be more sensitive to the exchange rate. one could look at it as the qe of small open economies. a year passed, and still the inflation rate was below target and still in negative territory and we observed that the same forces were at play, and expected to continue to be due to the global economic and monetary environment and because of our own domestic conditions. it was clear that we needed to show our patience with the price environment. we did so by introducing nonconditional forward guidance – there were clearly too many elements behind the low inflation to allow us to turn some into conditions – which we reiterated more recently, and in our view was correctly interpreted by the market. patience has its virtue but must not be confused with inaction, the boi has been patient with inflation to return, but quite active to ensure that the crucial broader environment of price stability remains intact. inflation expectations of the medium and longer term are still well anchored within the target range bestowing credibility to the monetary policy. to conclude in the spirit of this forward looking conference, i would draw 3 points from the recent israeli experience. first, protracted periods of below target inflation do not entail an automatic loss of monetary policy credibility. for the latter to be maintained, we need to better understand, and better explain, how the transmission mechanisms operate – through short term interest rates, long term rates, exchange rate and asset prices. this will lead us to use more tools and more targeted tools when available. second, the israeli experience does not lead to the need of changing the inflation target : an important anchor for the economy must not be amenable to easy change unless there is strong evidence that it is no longer at the appropriate level. inflation in israel is also strongly impacted by global inflation, and while the debate on changing the inflation target is also taking place globally, there is no reason for israel to be a pioneer in this change, if the change takes place. third, monetary policy must take into account financial conditions as signaled daily, if not hourly by the markets, but as upholder of a necessary and crucial nominal anchor it must be able to withstand noise and remain forward looking. this in turn requires the central bank to engage in discussions and better explain its interpretation of sometimes contradictory data on the one hand, and to withstand “ flavor of the day ” pressures. “ 2 / 2 bis central bankers'speeches