yandraduth googoolye : legal aspects on the national payments system address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the workshop on the legal aspects on the national payments system, in achieving compliance with principle 1 of the cpss - iosco principles for financial market infrastructures ( pfmi ) organized by the imf's regional technical assistance center for southern africa ( afritac south ), ebene, 27 november 2017. * * * ms l. effie psalida, afritac south coordinator, afritac south delegates from member central banks learned resource persons ladies and gentlemen good morning. i extend to you a warm welcome to mauritius. thank you for the privilege to providing the opening for the workshop, indeed very timely for mauritius, as we are currently finalizing our national payment systems legislation and working towards a national payment switch. i am also delighted to see ms onnene partsch in our midst today. ms onnene partsch has, as part of the imf technical assistance mission, provided assistance to the bank of mauritius in reviewing our draft national payment systems bill. i am confident that she, as well as all the resource persons, will partake their invaluable experience and knowledge with you during this week. amidst its basic traditional functions, a central bank is called to ensure that liquid resources in the economy are efficiently managed. this function allows for the use of cashless payment systems by economic agents. cash payments make economic agents incur costs in terms of interest foregone and higher security risks. a primary function of a central bank is to conduct monetary policy, the impulses of which are typically transmitted from banks to the rest of the economy. the operational features of the transmission, however, rests upon the smooth functioning of payment infrastructure. if the operation of payment systems is underdeveloped, these institutions will opt to retain a higher buffer of central - bank money for liquidity management purposes, with a view to better manage their liquidity. this, in turn, leads to weaker than intended monetary - policy impulses from the central bank. another primary function of the central bank is to ensure stability of the financial system. this implies that the financial system is robust to systemic risk. financial stability allows the financial system to withstand shocks without impairing the processing of payments in the economy, and ultimately, the allocation of savings to investment opportunities. accordingly, a

changing environment, regulators need to show flexibility but, at the same time, they have to ensure that there is no regulatory arbitrage. as the boundaries between banks and non - banks involved in financial activities get thinner, regulators need to closely collaborate in order to come up with smart regulation for the jurisdiction as a whole. ladies and gentlemen, i am confident that this workshop on the legal aspects of nps will provide the basis to better understand key requisites for devising or revising legislation regarding the payments system. on this note, i wish you all a fruitful workshop and a pleasant stay in mauritius. 4 / 4 bis central bankers'speeches