our regional and pan - african political and other official organisations need to take on board aggressively. i would urge you to give a push to this idea because, after all, risks are clear and present and increasingly so. i cannot help mentioning that one of the biggest challenges is to have an effective and efficient crisis resolution framework – one that duly takes into account rules, laws and by - laws of the home - host countries. enhanced macroeconomic sensitivity the nexus between the macro - economy and the banking sector has become more intricate and intensively inter - twined. banks lend to sectors whose performances are linked to overall economic activity ( e. g., construction, trade, manufacturing, tourism, gbc etc ). for instance, the relatively high degree of euro - centricity of the mauritian economy makes it vulnerable to a protracted period of slower growth in europe and to the vicissitudes of any shocks that are peculiar to europe. as a result, tourism and trade, as well as fdi, could all take a hit, should a shock materialise in europe ( e. g., fallouts of brexit or european banking crisis ). similarly, geopolitical events affect international commodity prices and consequently influence domestic inflation and the exchange rate. such a setback can spark off worries for banks that have lent to economic sectors for which the exchange rate, for instance, is a critical element. indeed, while micro - surveillance of the banking system remains essential, it needs to be topped up by macro - surveillance mechanisms, including macro - prudential policy measures, aimed at reinforcing the battery of defence mechanisms available to central banks. economic convention has often stressed on the impact of banks on the macro - economy as the ‘ financial accelerator ’ which creates financial cycles that may not be in sync with traditional business cycles. on the other hand, macroeconomic measures ( e. g., interest rate policy ) may create new avenues for financial fragility, including the so - called ‘ risk channel ’ of monetary policy. central banks have given attention to the relationships between monetary policy and financial stability and have frontloaded this interface in designing monetary and financial policies. initiatives taken by the bank of mauritius the bank of mauritius has, over time, deployed an array of stringent prudential and regulatory rules, leveraging its supervisory capabilities, to protect the banking sector and consolidate the reputation of the mauritian jurisdiction. at an early stage in the post 2008 financial crisis,

rameswurlall basant roi : recent reforms in banking regulation, supervision and prudential accounting in mauritius address by mr rameswurlall basant roi, governor of the bank of mauritius, at the imf afritac south seminar on international financial reporting standards 9, ebene, 7 april 2017. * * * ladies and gentlemen good morning i am happy to be here with you this morning. thank you mr ravi mohan, resident advisor to the imf ’ s afritac south, for inviting me to share my views on recent reforms in the area of banking regulation and supervision, including on prudential accounting, in mauritius. in 2012, the bcbs released the revised core principles for effective banking supervision to address weaknesses that came to light during the 2007 – 08 global financial crisis. in recent years, supervisors around the world – including the bank of mauritius – have taken radical steps to improve the regulatory and supervisory framework by drawing lessons from the crisis and by raising standards in line with the revised core principles and other internationally - accepted norms. the 2007 – 08 crisis demonstrated how easily a failed financial institution – in particular, systemically important ones – could send tremors across jurisdictions worldwide. shockwaves can be transmitted, for instance, directly via the liquidity channel by way of severe constraints to access funding or indirectly via second - round effects resulting from an economic slowdown. it is thus important that financial institutions build up resilience to be able to absorb both internal as well as external shocks. many regulators have made stress testing an integral component of the capital planning exercise for financial institutions. the bank of mauritius has recently developed stress testing models to independently assess the resilience of banks to shocks, both at macro and micro levels. banks are being required to implement an internal capital adequacy assessment by conducting stress testing for key risks at least once a year. in line with international trends, the bank of mauritius issued guidelines on capital conservation buffer back in june 2014. domestic systemically important banks are called upon to build adequate capital buffers that can be used in the event of stressed financial and economic conditions. whereas some supervisory authorities have already developed a risk based supervisory framework, a good number of authorities are still in the process of constructing their own framework to ensure that resources and compliance requirements are commensurate with the risk levels as well as the systemic importance of financial institutions. the bank of mauritius has initiated a phased roll out of a robust risk - based supervisory