yandraduth googoolye : implementation of basel ii in mauritius address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the special banking committee on the implementation of basel ii in mauritius, port louis, 21 september 2007. * * * chairman chairman of the mauritius bankers association chief executive of the mauritius bankers association chief executives of banks representatives of banks dear colleagues it gives me great pleasure to address you on the implementation of basel ii. as we all know, basel ii is a major challenge for small economies like ours. however, we must take pride in the fact that all our banks, regardless of their size, are committed to the implementation of basel ii. right at the outset, the bank of mauritius has favoured a consultative approach to the implementation of basel ii. since the setting up of the main committee, i must say that considerable work has been achieved. we take pride in the fact that we are having recourse to our in - house expertise and as we move forward we are creating synergies for nurturing our local jurisdiction. as you are well aware, the implementation of basel ii is a daunting and challenging task for all regulators the world over. it is also the case for mauritius. much progress has been made by our in - house staff and the representatives of banks, at the level of the working groups. despite uncertainties at some stage, we are confident that the project has regained momentum and that we will reach the march 2008 target for the parallel run. the bank has set up a new basel ii unit, the members of which are present here today. may i seize the opportunity to extend our appreciation to the dedicated representatives of banks that have relentlessly put in efforts to reach where we are today. we look forward to their ongoing collaboration. basel ii framework today, i would like to briefly touch upon the evolution of the revised framework, its broad structure and the preparatory measures taken by the bank for implementing this framework, and the challenges facing the industry in its migrating to basel ii. we must bear in mind that the basel ii framework allows for flexibility and we, at the bank of mauritius, will exercise our discretion to adapt the new framework to the specificities of our jurisdiction. the need to achieve greater financial inclusion and to provide an efficient credit delivery mechanism remains our overriding consideration. the basel i accord dates back to 1988 when the basel committee on banking supervision released a framework for capital adequacy. mauritius

and conditions of living. it has enabled all nations to produce on a higher efficiency scale. it has helped increase productivity. it has allowed the instant spread of knowledge and ideas so that the range of choices available to consumers has expanded continuously. trade and globalization have without doubt brought enormous benefits to many countries and citizens of the world. we might disagree on the exact modalities and the sequencing of trade and tariff reforms, but few of us would dispute that international trade has been a major driver of global economic growth since the end of the second world war. trade expansion boosted post - war economic recovery in the leading economies of today ; germany and japan are notable examples that come to mind. it figures large in the “ growth miracles ” of the asian tigers, mauritius, but also china! but this has not happened without those countries facing their own crises. the impact of the crisis on trade finance today we are facing the worst economic crisis in generations and this crisis is threatening to undo the economic development that many countries have achieved so far. undoubtedly world trade has been one of the worst casualties in the global financial crisis. this is even threatening to “ erode people ’ s faith in an open international trading system. ” the negative impact on world trade finds its way through two main channels. first the credit crunch resulting from the financial market turbulences has led to a fall in the supply of trade finance, which has rightly been described as the oil of the wheels of international trade ; and secondly the spillover of the financial crisis into the real economy has caused the worst recession since the great depression and fuelled a contraction of trade volumes. and those of us who believe in open trade almost as an article of faith, have watched with growing disbelief as the threat of protectionism started to rear its ugly head. as economic activity collapsed and unemployment soared in many countries, protectionist sentiment has risen along with the attraction of other trade - distorting policies. many countries have implemented domestic stimulus packages aimed at protecting their businesses and industries, favouring domestic goods and services sometimes at the expense of imports. policy - makers are perfectly aware that such policy actions have international implications – in the short term they can boost domestic demand but in the long term, they undermine the international trading system and global wealth and welfare. outlook for world trade for 2009 if we look at the prospects for world trade for 2009, we see that the world bank has predicted that the volume of world trade in goods and services will decrease by around 6 percent.