away from hurdles. but does this mean that our financial institutions should be transformed as revenue collectors for the us? in my opinion, the best way to tame the beast would probably be for mauritius to enter into fatca partnerships as other jurisdictions have done. you would be interested to know that in february last, five european countries – france, germany, spain, italy and the uk – signed a deal with the us. they agreed that they would each enact legislation requiring their local ffis to collect and report fatca - style information to their local tax authorities. the european jurisdictions would then transfer the information to the us. under such arrangements, the withholding on passthru payments would generally only apply to third - country non - participating ffis. the obligations under the agreement are reciprocal. however, in order to enter into such a fatca partnership, mauritius would need to amend its laws to address any conflict of laws issues that could arise. the advantage of entering into such a partnership is that mauritius would not only avoid any potential damage to its reputation, in case of non - compliance, but it may benefit from an enhanced “ clean ” image, since compliance with fatca would require more detailed information - gathering and due diligence procedures. the downside of this is that mauritius might well lose some of its us clients. however, if the tide is in favour of fatca compliance, the us clients might well realize that they have no real alternative : opting for a non - fatca - compliant jurisdiction might well be costlier as they would be hit with the 30 per cent withholding tax. at any rate, the attractiveness of the mauritian financial sector lies in the fiscal and other advantages it has to offer, and not in any banking secrecy laws. nonetheless, mauritius cannot blindly rush into adopting a fatca partnership agreement with the us. there is a host of questions that first need to be addressed. are our financial institutions ready to respond to, and comply with, fatca requirements? does the mauritius revenue authority ( which would probably be the authority designated to conduct these operations ) have the capacity – financial and otherwise – to cope with the requirements imposed by the proposed fatca partnership? in sum, are our institutions ready to rise to the challenge? this seminar will help us in our search for answers to these and related questions. let me commend grant thornton and the mauritius bankers association ( mba ) for this initiative. it will help to clear the air and point the

operations, to regulate the level of liquidity and prices. this is now stabilising. that said, there is an element of inherent fragility that is related to fragmentation in the money market. there are pools of liquidity that cannot necessarily be tapped when liquidity is needed. liquidity is not flowing smoothly across the euro zone, the market remains fragmented and that hampers the self - balancing process that you should normally see in a market. this makes the euro zone money market vulnerable to shocks either from the inside or the outside. that explains why we remain vigilant. and certainly in case we would see the current equilibrium being unsettled, the ecb would stand ready to act and add to liquidity. it is very easy for us to do so. we have instruments that are ready and usable. we stand ready to do it, but i do not see the need to do it today. would a negative deposit rate help to address the fragmentation in money markets? it is a very possible option. that is something we are considering very seriously. but you should not expect too much of it. it can help to provide an additional incentive, but it is not the answer to everything. but it is possible and something that we have been discussing and as you know, we are technically ready to do it. would other options, such as suspending the sterilisation or cutting the reserve requirements, just add to the existing liquidity pools or would they also be effective? they can be effective to recreate a level of excess liquidity which would find its way in all the cracks of the system, as we saw when excess liquidity was at very high levels about a year ago. they can be effective in particular circumstances where there would be a need at some point in time to inject liquidity into the market. but i don ’ t see the need to do it now. and they are very much one - off measures and cannot be a permanent answer to the issues faced by the money market. bis central bankers ’ speeches if deflation in the euro zone is a very alarming situation, why is deflation in the part of euro zone not a very alarming situation a very alarming situation for that part? because deflation is a dynamic concept. it has to do with expectations and, it has to do with both inflation and output. one measure of deflation is private agents in the economy postponing their decisions to invest or consume and these are