prior approval for offering internet banking services. at the same time, banks are free to open atms at any location they choose without the prior approval of the bank of mauritius. before granting approval for introduction of internet banking, we at the bank look at the risk management framework, the data and physical security and safety of the processes apart from the technological platform. we are in the process of revising the existing guideline on internet banking to make it more comprehensive and to align it with recent developments. let me now dwell on some of the major benefits of e - payments. at the macro level, it enlarges consumer market, and thus contributes to economic growth. i am sure you are all aware of the tremendous advantages of e - ticketing, for instance. the advent of b2b and b2c portals enhances transparency and facilitates better price discovery. further, e - banking helps spread banking facilities to areas that might, for economic reasons, have been unviable for opening a brick and mortar branch. thus, e - banking could facilitate greater financial inclusion. at a micro level, e - payment reduces the threat of physical loss of funds to the holder of a card and for the seller too, the ease of settlement helps in better cash flow management. there are some concerns too. the safety of the system is highly dependent on the robustness of the technology, the anti - hacking features, continuous effort at improving risk management framework and regular information system audit. the cardholder faces risks arising from the threat of counterfeiting ; now cards can be morphed in quick time and used for unauthorized withdrawal of funds. the bank encourages financial institutions to have adequate anti - counterfeiting features in their cards, insists on 24 hour help lines and requires safe delivery of pins etc. simultaneously, the bank of mauritius also embarked as part of its 40th anniversary celebrations on a customer education programme to create better awareness among the public. another significant risk arises from the use of cards for trans actions with the b2c portals through less secure payment gateways over the internet. there is need for adequate caution in using such websites for making purchases through e - cards. in some jurisdictions, financial institutions issue separate cards exclusively for on - line payments, with such cards having a smaller sub - limit out of the main cards. perhaps, issuers of cards in mauritius could explore this possibility. credit cards are subject to high delinquency ; in most countries the nonperforming advances pertaining to credit

out, it might be optimal for them to divert some resources from risk management, a phenomenon known as moral hazard. if no bail - out can be expected, risk management must be conducted thoroughly. then, risk pricing in financial markets would correctly reflect the risks entrenched in financial instruments : market forces at work to underpin financial stability. 3. some new trends to be watched global imbalances have taken centre stage in the debate on the international financial system recently. these may cause major disruptions if they are unwound in a disorderly way. sharp and unexpected movements in exchange rates and interest rates would affect financial intermediaries directly and detrimentally - and all the more so if these were highly leveraged. such turmoil would most probably produce spill - over effects in other financial markets and lead to adverse macroeconomic developments that would seep back into the financial system. the fact that these imbalances have been around for quite some time without spelling trouble must not lull us into complacency. potential triggers - diminished expectations as to growth and inflation performance or reserve policy in asia, to name but a few - are real, and they warrant attention. beyond these topical issues, however, more fundamental and longer - term trends are arising in the international financial system. they are driven by financial innovation and technological progress, and they challenge financial stability on an ongoing basis. central banks, supervisors and regulators must therefore watch out for new trends and monitor them carefully. potentially relevant changes need to be assessed at an early stage to ascertain their possible impact on financial systems and their implications for stability. complacency never pays. the two trends which i want to highlight today are both rather new, quite fundamental, and they share the key feature of reducing transparency. in a market economy, transparency is a key tool for preserving financial stability. if a high degree of transparency prevails, market discipline can largely replace regulatory intrusion. transparency enables market participants to monitor their counterparties and to manage their risks effectively. as long as incentives are undistorted, transparency can do its job. transparency also facilitates the supervisors ’ job of identifying possible weaknesses early on. supervisors need to have a clear picture of where risks are allocated and whether and where undue risk concentrations might be growing. hence, developments in the financial system that impair transparency warrant scrutiny. 3. 1 risk transfer “ to ” the household sector new techniques of risk transfer have greatly enhanced one of the core functions of the international financial