to the bank as well as to certify that the financial statements represent a true and fair picture of the affairs of the financial institutions. sound credit risk management is a key factor in the accuracy of expected loss models. the bank of mauritius issued a guideline on credit risk management back in 2003 which establishes sound principles of credit risk management whilst at the same time establishing the responsibilities and accountabilities of senior management and the board of directors. there are several other regulations regarding credit risk management and adequacy of provisions which in addition to the ones i have just stated will assist in the maintenance of the safety and soundness of banks and other deposit taking institutions through the transition period. will the new standards on ifrs 9 help to avoid the next crisis? the concept of expected credit loss model aims to recognise losses adequately and in time. it will address the ‘ too little and too late ’ provisioning problem. however, the model itself will be largely dependent on underlying data, expert judgement, subjective estimates of macroeconomic parameters as well as adequacy of the internal control framework notwithstanding the it infrastructure and analytics. subject to these challenges being effectively addressed, boards and senior management of banks will take informed decisions to proactively manage provisions. banks ’ senior management, board of directors, external auditors as well as supervisors all have a critical role to play in the smooth transition and implementation of the new prudential accounting regime. thank you. 3 / 3 bis central bankers'speeches

rameswurlall basant roi : recent reforms in banking regulation, supervision and prudential accounting in mauritius address by mr rameswurlall basant roi, governor of the bank of mauritius, at the imf afritac south seminar on international financial reporting standards 9, ebene, 7 april 2017. * * * ladies and gentlemen good morning i am happy to be here with you this morning. thank you mr ravi mohan, resident advisor to the imf ’ s afritac south, for inviting me to share my views on recent reforms in the area of banking regulation and supervision, including on prudential accounting, in mauritius. in 2012, the bcbs released the revised core principles for effective banking supervision to address weaknesses that came to light during the 2007 – 08 global financial crisis. in recent years, supervisors around the world – including the bank of mauritius – have taken radical steps to improve the regulatory and supervisory framework by drawing lessons from the crisis and by raising standards in line with the revised core principles and other internationally - accepted norms. the 2007 – 08 crisis demonstrated how easily a failed financial institution – in particular, systemically important ones – could send tremors across jurisdictions worldwide. shockwaves can be transmitted, for instance, directly via the liquidity channel by way of severe constraints to access funding or indirectly via second - round effects resulting from an economic slowdown. it is thus important that financial institutions build up resilience to be able to absorb both internal as well as external shocks. many regulators have made stress testing an integral component of the capital planning exercise for financial institutions. the bank of mauritius has recently developed stress testing models to independently assess the resilience of banks to shocks, both at macro and micro levels. banks are being required to implement an internal capital adequacy assessment by conducting stress testing for key risks at least once a year. in line with international trends, the bank of mauritius issued guidelines on capital conservation buffer back in june 2014. domestic systemically important banks are called upon to build adequate capital buffers that can be used in the event of stressed financial and economic conditions. whereas some supervisory authorities have already developed a risk based supervisory framework, a good number of authorities are still in the process of constructing their own framework to ensure that resources and compliance requirements are commensurate with the risk levels as well as the systemic importance of financial institutions. the bank of mauritius has initiated a phased roll out of a robust risk - based supervisory