fail. an international agreement on a cross - border resolution mechanism for internationally - active banks is not likely to be reached in the near future. we are waiting with bated breath for more rapid progress with the banking union at the level of the european union. we cannot wait for all the lessons to be learned and new institutions to be forged, before we, as regulator, reflect on how these lessons can be applied to our own banking system. our problem is somewhat smaller, and certainly less intractable – provided we have an open mind about it. someone has said : “ more powerful than the will to win is the courage to begin. ” in the case of barclays, we have amply demonstrated the courage to begin the process of restructuring. our banking sector is made up of 21 banks, of which five operate as branches of foreign banks. of these, we consider a few to be domestic systemically important banks ( dsibs ), in view of their size and complex structures. the global crisis highlighted two sources of vulnerability that the bank needs to address to ensure the stability of the domestic financial system. the first is the need to protect affiliates of cross - border banks operating in technically, it is a surrender of licence under section 11 ( 7 ) of the banking act 2004. bis central bankers ’ speeches our jurisdiction from any potential problem affecting their parents in their home country. the second vulnerability stems from the fact that the failure of a dsib could not only impair the provision of key financial services but also have knock - on effects on other parts of the domestic economy. these issues have been exercising my mind for quite some time. this is why i have been encouraging branches of foreign banks operating in mauritius to convert into locally - incorporated subsidiaries, and urging our dsibs to reduce the complexity of their structures by resorting to what is now labelled as “ ring - fencing. ” we have been setting the stage for some time. that is where barclays enters the scene, in pursuit of its “ one africa strategy ”. it is seeking to align the legal structure of its mauritius branch business with the rest of barclays africa entities. barclays sought our approval to become a wholly - owned subsidiary of barclays bank plc. barclays was the first of the targeted banks to do so. just as it had also been the first to set up a local advisory board for its branch operation in february 2012, well before we enshrined this in the revised guideline on corporate governance in

are 2 / 4 bis central bankers'speeches bringing forward the day when households feel sufficiently comfortable to increase their spending again. the easing of monetary policy is also supporting a turnaround in housing investment and has also had an effect on the exchange rate, which boosts demand for our exports. so, it is working. looking forward, we are expecting progress to be made towards the inflation target and full employment, but that progress is expected to be only gradual and there are uncertainties. given the only gradual nature of the progress, the board has been discussing the case for a further easing of monetary policy in an effort to speed the pace of progress and to make it more assured. in considering this case, we have taken account of the fact that interest rates have already been reduced to a low level and there are long and variable lags in the transmission of monetary policy. the board also recognises that a balance needs to be struck between the benefits of lower interest rates and the risks associated with having interest rates at very low levels. internationally, there are increasing concerns about the effect of very low interest rates on resource allocation in the economy and their effect on the confidence of some people. lower interest rates could also encourage more borrowing by households eager to buy residential property at a time when housing debt is already quite high and there is already a strong upswing in housing prices in place. if so, this could increase the risk of problems down the track. after considering this balance, the board decided to maintain the cash rate unchanged. we recognise, though, that the nature of this balance between benefits and risks can change over time and it is dependent upon the state of the economy. if the unemployment rate were to be moving materially in the wrong direction and there was no further progress being made towards the inflation target, the balance of arguments would tilt towards a further easing of monetary policy. so we are continuing to watch the labour market carefully, as we seek to strike the right balance in the interests of the community as a whole. while on the topic of interest rates, i would like to draw your attention to some new analysis of lending rates that will be included in today ’ s statement on monetary policy and updated each month on the rba website. 1 in particular, the newly published data show that households that took out their mortgage four or five years ago are paying noticeably higher interest rates than those who took out their mortgage more recently. this reflects the fact that the discounts offered to lenders ’ standard variable rates