entails unduly long and costly court procedures ; and third, market risk may turn out to be a significant risk given the lack of depth and breadth of financial markets. over and above these considerations, banks may voluntarily hold a higher capital adequacy ratio if they want to maintain or even improve their credit ratings, especially if they intend to access the international capital market. two internationally credit - rated banks in mauritius have car well above 10 %. 2 / 4 bis central bankers'speeches with respect to the implementation of the liquidity risk requirements, the bank of mauritius reviewed its guideline on liquidity risk management in october 2017 to incorporate the liquidity coverage ratio. by virtue of mauritius being a regional financial centre, banks were required to maintain the lcr by major currency. effective 30 november 2017, banks should maintain on a monthly basis an lcr of 100 per cent in mur, 60 per cent in each significant currency and 60 per cent on a consolidated basis. the lcr requirement in each significant foreign currency and on a consolidated basis was increased to 70 % on 31 january 2018 and will be gradually increased every year to reach 100 % by 31 january 2020. largely due to the prevailing excess rupee and foreign currency liquidity, the average lcr for the banking sector in mur, usd, eur and cny as at 31 april 2018 stood at 266 %, 108 %, 77 % and 83 % respectively. on a consolidated basis, the average lcr for the banking sector was 174 % as at end - april 2018. a higher car and appropriate liquidity do not on their own guarantee zero risk of failure. best practices in corporate governance and good risk management practices are complementary actions favoured by the regulator. let me conclude with four remarks, which you may wish to reflect upon : the first remark is about the growing recognition that the “ one - size - fits - all ” regulatory framework may not be optimal. increasingly, in several countries, the principle of proportionality in regulation is being discussed and implemented. what is meant for internationally active banks may not or should not be indiscriminately applied to all! while there seems to be a strong case for proportionality in regulation – banks with simple business models should not fully implement basel iii -, it is not at all simple to decide which features of basel iii should not apply and which features should apply. generally, proportionality in regulation tend to be an outcome of a riskbased approach to regulation. the

second remark is about the unintended consequences of stringent capital requirements of basel iii. one european bank has already exited africa, including mauritius. two others are in the process of exiting the mauritian jurisdiction as the group review the business models, refocus operations on their core markets, cut down costs by running down their less profitable and noncore business lines, reducing their geographical footprint and investing heavily in technology to optimise capital within group. a case in point is the divestiture of barclays plc in barclays africa group limited. barclays in africa was a successful story of over 100 years which is about to end not because it was not profitable – barclays africa generated nearly £1 billion profit before tax in 2015 – but because, according to its group ceo, of increased cet1 requirements by the uk regulatory authority, gsib buffer, tlac, and the uk bank levy. in the barclays ceo ’ s review for the annual report 2015, barclays africa has become “ non - viable economically under current regulatory capital rules ”. he further writes “ barclays uk has to carry 100 per cent of the financial responsibility for barclays africa and receive only 62 per cent of the benefits. ” it is worth noting that barclays uk has also exited its retail banking operations in italy, france, and pakistan and sold its wealth & investment management business in singapore and hong kong. the third remark relates to the unintended consequences of the introduction of the liquidity coverage ratio. basel iii restrictively defines liquidity as an adequate stock of unencumbered high - quality liquid assets ( hqla ) that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30 calendar day liquidity stress scenario. in mauritius where there are not enough liquid assets, banks have to keep large amounts of cash with the central bank at zero interest rates instead of interest - earning placements with banks abroad. in turn, this could adversely impact customers with banks charging higher fees, charges and commissions. the fourth and final remark relates to the impact of basel iii rules on trade finance. basel iii could significantly undermine cross - border trade finance activities. several provisions of basel iii, 3 / 4 bis central bankers'speeches such as the leverage rule, risk weighting requirements and the liquidity rules raise the costs of banks ’ extending trade finance, which is already a low margin business. the leverage ratio requires banks to hold top quality tier one capital equal to