attracted hateful criticisms. the tendency of some groups, like a special - forces warrior, to fight every new regulation had reached a vexing point. despite resistance from pressure groups to resist, the bank had proceeded with its regulatory reforms and soldiered on effectively. it took quite some time for players in our economic system to fully realise that banking is a different kind of business and financial systems are not and will never be totally free market systems. over the years much has been achieved in terms of the health improvement of deposit - taking institutions in the country. effective banking supervision is an evolving discipline. free flows of capital in a globalised world marked by all kinds of disruptions, unleashed by economic and non - economic forces, the quests for high returns by investors and quick profits by speculators, fraudulent practices, excessive risk - taking and violent economic cycles, amongst others, have made regulation and supervision of financial institutions an unprecedentedly challenging task. the regulator ’ s job has become increasingly complex and demanding in terms of skills and clairvoyance, more so after the august 2007 international financial crisis. as regulators, we need to constantly bear in mind that any capitalist economy inevitably progresses from conservative finance to reckless speculation. the economy has financing regimes under which it is stable and financing regimes under which it is unstable. in other bis central bankers ’ speeches words, over a period of prosperity, a capitalist economy transits from financial relations that make for a stable system to financial relations that make for an unstable system. we also need to bear in mind that it ’ s in the personal interests of the ceos of banks to show profits, often by any means, for the benefit of their shareholders. and it is simply not true that the pursuit of their individual interests will lead to financial stability. what ’ s good for an individual ceo may not be necessarily good for the banking industry as a whole. the self - interests of bankers and levered investors do occasionally lead to economic contractions and a loss of human welfare. i need not emphasise to a crowd like this one that financial stability is an indispensable precondition for economic growth and human welfare. there is every reason for regulatory authorities to act proactively in order to prevent financial crises from developing in the first place. with the recent experience that the bank of mauritius had with regard to an ailing bank, i cling to the view that regulators must broaden their scope and take initiatives to prevent the development of practices that favour financial

a continuation of our policy of limited intervention and would imply a greater role to the market in managing the exchange rate. we expect that trade in currency derivatives can assist this area, by relieving pressure on the spot market and contributing to eradicate erratic and opportunistic behaviour, and thus reducing volatility. the launch of a global derivatives exchange in our jurisdiction is yet another indication of the growing sophistication of our financial system. i strongly believe that the domestic financial market is now mature enough to engage in derivatives trading under proper regulation. i would like to mention in the same breath the efforts of the bank to develop a secondary market for treasury bills and bank of mauritius bills. this will add greater depth and liquidity to the official paper segment of the market and perhaps pave the way for a bond and interest rate futures market. another initiative worth mentioning is the introduction of islamic financial services and the need for islamic treasury products. discussions have been ongoing with gbot for several months now to provide a platform for launching and trading such products. yesterday itself, the press reported that the stock exchange of mauritius ( sem ) and the central depository & settlement co ltd had approached the financial services commission to launch index futures trading, targeting the sem - 7 index. all these initiatives aim at remedying the deficiencies of our financial system to which i alluded earlier and which need to be addressed to achieve greater financial system efficiency and realize our ambition to become an international financial centre. the development of a vibrant market for trading currency derivatives, not just for the domestic market but for the region, is another element that would contribute to position mauritius as a world - class financial centre. it would help in forging deeper economic ties and strengthen our commitment to regional integration. such ties are mutually beneficial – for mauritius they can help to overcome the constraints posed by the small size of our domestic market and for our regional partners in africa, they can contribute to accelerate the pace of development. perhaps there can be no better testimony to our commitment to regional integration than the determined drive by some of our major banks to expand their operations in the region. as the process gathers momentum, others will follow suit ; and currency derivatives are set to take on greater importance in the risk management toolkit of our banks. this seminar comes at a time when policy - makers across the world are reflecting deeply on the role of the financial crisis in the global recession and the necessary changes to be made to the financial system to make it