would surely be covered by the resource persons in the workshop. the legal framework must accordingly provide explicit and defined authority of central banks over payment systems, including amongst others the powers to license, authorise or designate payment systems and clearly define their oversight functions. the basis for cooperation with the regulators of other domestic fmis as well as foreign fmis must also be clearly spelt out in the law. we must not ignore the regional dimension to this lively subject. cross - border trade in the region is rapidly expanding and various initiatives are evolving for the continent. to facilitate payment transactions, africa is host to a number of cross - border payment systems : the sadc integrated regional electronic settlement system ( siress ) and the comesa regional electronic payment and settlement systems ( repss ), west african monetary zone ( wamz ), the east africa payment systems ( eaps ) of the east african community ( eac ). i am sure that afritac member states must be participants to at least one of them. the bank of mauritius is itself a participant in the repss and siress. however, there is currently no harmonised legal and regulatory framework for payments in the continent and member states are at varying stages of development of their legal and regulatory frameworks for their respective nps. in the sadc region, for example, in the absence of an appropriate sadc wide legal and regulatory framework, member states participating in the siress have structured the legal arrangements between themselves through a number of multilateral agreements, in view of providing for legal certainty. sadc countries have, however, already committed themselves to harmonise their legal and regulatory frameworks and to establish institutional and organisational structures conducive to the establishment of an integrated payments market. ladies and gentlemen, payment services are considered to be the stepping stone for financial inclusion. people ’ s demand for ever faster, more convenient and flexible means of payments has led to a dramatic evolution in the payment ecosystem, especially in the retail payment services. today, the contours of the global financial system are different from what they were, say, a decade before. major developments have underscored the implications for payment systems and financial stability as they have exposed central banks to additional sources of risks. for instance, the issuance of new financial instruments, the increasing size and complexity of financial systems, and globalization of financial markets have contributed to generate new areas of risks. financial innovations, due to technological advances in information and communications, have impacted strongly

yandraduth googoolye : supervision and regulation of state - owned banks address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the financial stability institute, world bank and international monetary fund seminar on “ supervision and regulation of state - owned banks ”, hosted by the reserve bank of india, mumbai, 5 november 2008. * * * distinguished guests, ladies and gentlemen, i am very pleased to be in mumbai today to share a few thoughts on supervision and regulation of government - owned banks. i must at the outset compliment the financial stability institute, world bank and international monetary fund for having chosen this issue as the theme for this seminar. no subject could be more topical in the current context given that we are seeing in the west a reverse process of private banks getting wholly or seminationalized. therefore, the lessons of this seminar, which is targeted at the emerging economies, could be useful for the developed world as well, in a more meaningful way than perhaps they might have been a few weeks ago. before getting to the theme of regulation and supervision of government - owned banks, let us see the different ways in which government can have stakes in banks. firstly, government ownership can arise at the initial shareholding stage, i. e. an entity in which government has majority shareholding applies for a banking licence. secondly, government may set up a bank or nationalize existing bank ( s ) through an act of parliament to further its social and developmental objectives, and thirdly government could acquire shares in an existing bank to bailing out a failing bank, something quite fashionable these days! indeed there is an extensive literature and a lot of debate on the role of government ownership in banking. it would perhaps be useful to briefly touch upon some of the theories that have been put forward on government ownership in banking. the views that have been more frequently associated with state ownership of banks are the social view, the political view and the agency view. the social view suggests that government - owned banks contribute to economic development and improve general welfare ( atkinson and stiglitz ( 1980 ) ). the political view highlights the role of politicians in pursuing their personal goals, for example maximizing employment of their electorate or financing favoured enterprises ( shleifer ( 1998 ) ). the agency view relates to the agency costs in government bureaucracy that may result in managerial inefficiency ( banerjee ( 1997 ), hart, shleifer and vishny (