the achievement of a common economic goal. in the scheme of things, trade liberalization 4 / 7 bis central bankers'speeches meant, inter alia, elimination of quota on imports, removal of import licenses, gradual reduction of tariffs and customs duties etc. on the fiscal side, the pre - eminent measures were a planned reduction of the then high corporate tax and income tax. a prudent wage policy was deemed a key element in the overall policy package to beef up the competiveness of the mauritian economy. on the central banking side, a few policies aimed at complementing measures for strengthening competiveness and financial sector reforms were set as an agenda for immediate execution. the export sectors were the first policy target. the bank ’ s exchange rate policy was immediately geared towards one prime objective : achieve and maintain the competitiveness of the export sectors. following the introduction of the new currency peg, the bank of mauritius monitored the exchange rate of the rupee on a daily basis. corrective steps were taken as and when they were deemed necessary. in this exercise, constant attempts were made to keep the exchange rate of the rupee ( i mean real effective exchange rate of the rupee ) stable. the exchange rate of the rupee, deftly managed, in an imperfect financial market eventually enabled exporters to better predict costs and prices of their products. the previous two currency pegs had not permitted the re - alignment of the exchange rate of the rupee on a regular basis. the new peg did. investment in the economy shot up. the manufacturing sector, in particular the export sectors, underwent an unprecedented expansion. the economy fired in all its cylinders. entrepreneurs mushroomed. like boats in the rising tide of economic prosperity, new enterprises floated profitably. exports shot up. the economy attained a state of full employment conditions. the foreign exchange reserves of the bank of mauritius rose to levels never attained before. economic prosperity reached the lowest strata of the population. government revenue collections improved substantially despite cuts in corporate and personal income tax rates and reduction in tariffs and customs duties. it ’ s certainly not my intention to claim that the unprecedented economic prosperity of the second half of the 1980s is attributable solely to the bank of mauritius. far from it. i am sure, you will agree with me that entrepreneurship and industrial success do not occur from a void. they thrive in the soil of political structure and a culture comprising many essential elements. those combined elements give rise to synergy

1980s, was quite likely to be followed by a process of trade liberalization at the level of individual countries, regional level as well as the global level. having taken the view that, at some stage, trade liberalization might eventually affect the balance sheets of banks thereby undermining their soundness, the bank of mauritius far - sightedly intensified its regulatory and supervisory activities in a bid to stave off as far as possible its adverse impact ; 3. there exists a solid body of research strongly suggesting that improvements in financial arrangements precede and contribute to economic performance. developing countries with relatively deep and efficient financial markets in the 1960s and the 1970s grew faster than those with relatively shallow markets. the bank of mauritius has thus been committed to initiate credible regulatory and supervisory measures with a view to strengthening the banking industry ; and 4. the efficacy of monetary policy implementation in a liberalized financial system depends greatly on the strength and efficiency of the players in the financial marketplace. we have a bank - centered financial system. in other words, banks are at the epicentre of our financial system. evidently, the players in our market are banks and bankers. banks are the medium through which the monetary policy impulses of the bank of mauritius are transmitted to the rest of the economy. the weaker the medium for transmission of monetary policy impulses the lesser is its efficacy in achieving the desired objectives. the medium, that is banks, had to be strengthened and hence the repeated emphasis on the need for a sound and solid banking industry. these have been the inter - related objectives envisioned in the approach adopted by the bank of mauritius in the last seven years with regard to the banking sector. despite a number of hurdles and unforeseen happenings, the bank of mauritius relentlessly pursued its objectives, for it is in the best interests of the economy to have a banking industry sufficiently strong to meet emerging challenges. all through the road traveled so far, the bank of mauritius has not been short of criticisms from commentators. in january 1992, the financial times carried a headline “ man bites watchdog ”. the man was robert maxwell. in the list of watchdogs, pension fund trustees, external auditors and accountants, institutional shareholders, the bank of england and a number of other regulators were identified as potential scapegoats. in private conversations and in the media everyone had his favourite scapegoat. some carefully avoided including themselves in the list of potential candidates for the scapegoats, as is the case in