, ifis often operate as a catalyst agent, leading the first issuance ( start ups ) in currencies of emerging countries in both local and international markets. the issuing of ifis could also help decoupling the sovereign risk of currency risk, meeting the demand for assets in local currency ( for example, from domestic institutional investors, with liabilities in local currency but with fear of sovereign defaults ). instruments in local currency rating to aaa would be of interest to such investors. there are several examples that show the progress institutions such as the world bank, the idb and the bis have made over the last years on this field. with regards to the bis, as central banker of the monetary authorities, its role in the development of the local debt markets may have at least two aspects. on the one hand, the bis can coordinate joint initiatives ( and provide certain guarantees ) of some groups of central banks that decide to unify part of its reserves to invest in specific purposes, such as buying bonds in local currencies. moreover, although most of the resources administered by the bis are invested in financial assets of top quality at international level and their exposure to the various risks are managed conservatively, a greater portion of such funds could be spend toward the direct purchase of debt denominated in local currencies of emerging countries or to the use of them as collateral of certain bond issuance of countries with limited depth of their financing markets in local currency. in a nutshell, carrying out the reforms mentioned above does not mean blindly following certain recipes that must be applied always and under any circumstances. this acknowledges that there are different ways of putting into practice the adequate policies to achieve a stable and deep financial market. moreover, it is not only necessary to identify the adequate economic policies for a country under specific circumstances, but correct timing is also crucial when implementing the measures. the pace at which reforms and policy measures are implemented cannot be independent from the structural characteristics, nor the economic and social environment in any particular country. therefore, the pace chosen should maximize the likelihood of success of the process. depth, quality and pace of institutional reforms are at least as important as their stability in time, since otherwise, any effort shall be vain. for such purpose, they must be consistent ( without generating more losers than winners in the short term, because otherwise they will not be politically sustainable ) and involve consensus among the different stakeholders. they cannot be imposed in an authoritarian way or imported from other countries ( transferring

. 5 percentage points below the headline inflation rate. we expect the core inflation for the current fiscal year to be in the region of 4 per cent. i may say that we have made considerable headway in achieving price stability in recent years. the operational framework for the conduct of monetary policy combined with an increasing degree of transparency has led to a higher level of appreciation by the market of policy decisions of the bank. this has clearly aided expectations building. in the past central bankers believed that unanticipated changes in their policies were more effective. contrary to this perception, experience demonstrated that policy induced shocks rather harmed economic agents than helped sharpen the effectiveness of the policy. central bankers have thus adopted a stand – not that much palpable - that allows market players to formulate a view and anticipate their likely policy moves. we have growing evidence of this phenomenon in mauritius in the last few years. let me use an anecdote to express what i mean. in the 19th century a leading newspaper in france announced the death of a famous ailing french author. the author, upon hearing the news about his own death, said, “ eh! i have started living again. ” a week later the author actually died. the day after, the same newspaper came with a headline : “ we were the first to announce the death of the author. ” we have observed such capabilities emerging among our market players and commentators. and that augurs well for the stability of our financial industry. ladies and gentlemen, so strong is the weakness of mankind to fall into mutual animosities, that the most fanciful artefacts have been sufficient to excite unfriendly passions. let me conclude with two observations : the first is about profits of the banking industry. in our type of an economic system profit making is not regarded as a sin. banks make fat profits. but banks also take high risk. banks also make fat provisions for debts that have gone bad. banks also need to build reserves and strengthen their balance sheets. strong and sound balance sheets make strong banks. the rate of growth of pre - tax profit of commercial banks is observed to be lower than the growth rate of their total assets. moreover, in the last ten years profits of the banking industry have grown at about the same rate as the nominal growth rate of the economy. my second observation relates to the idiosyncratic view that commercial banks in mauritius operate as a cartel. no ; that is not simply barking up at the wrong