two years ago ( june 2010 ), i was privileged to be among the governors who were being hosted to a dinner at all souls college in oxford by john vickers, who was then chairing the international banking commission. he had arranged for a rather unusual after - dinner speaker, unusual for bankers ’ meetings. this was the oxford professor of … …. zoology, lord may, who treated us to a talk on “ the ecology of finance ”. the gist of his argument was that simple ecosystems, not complex ones, were better at resisting stressful environments. he cautioned against extrapolating from ecosystems to financial systems but suggested that there were lessons to be learnt. avoid complexity, and keep it simple. the mauritian banking structure is a fairly simple one, with banks mobilizing deposits in traditional ways and the lender knowing the borrower. the simple structure and traditional banking values, allied with normally non - intrusive regulation, have also contributed to the resilience of our banking system. let me come to my final point – the gold bar project that h. e. the president, will be launching later tonight. we have witnessed the domestic savings rate halving from 29 % in 1992 to 14 % currently. this is partly in response to continued negative real interest rates on saving deposits. the outlook for normalising rates in the near future is not encouraging. in the absence of attractive financial saving instruments, it is the domestic property market that draws speculative investment with the risk of a real estate bubble. more generally, there is demand for a “ safe haven ”, away from paper currencies as we are living under the threat of the depreciation of paper money and, particularly of reserve currencies, from quantitative easing. this is the rationale for the bank to introduce physical gold as a new asset class. the bank, which already sells industrial gold to jewelers and gold coins to the general public, has partnered with rand refinery of south africa for this gold bar project. there are two features to this new savings instrument that enhance its attractiveness. we are offering a buy - back option to make the investment as liquid as possible ; and we are proposing custodial services in our vault to mitigate the risk of loss through theft. we are initially proposing gold bars in three denominations, 10g, 50g and 100g, and they will be put on sale at competitive prices, set as close as possible to those prevailing on the international bullion market

crop at preferential rates. we negotiated paper - thin margins with the commercial banks to make sure that it provided maximum benefit to the targeted beneficiaries. sixth, we worked closely with the treasury to develop new bank lending facilities for the small and medium enterprises sector. this was announced in the november 2011 budget. the bank supported the initiative by providing the framework through which finance could be extended on favourable terms and conditions through commercial banks. the bank has been closely monitoring the scheme since it was launched. seventh, public debt management. the bank was entrusted with the management of central government ’ s debt since december 2008. since then, the bank has innovated with a host of measures to render the government securities market deep and liquid. single maturity auctions that determine the government ’ s debt profile are conducted since 2010 and this has enabled the issuer to decide on its debt profile rather than leave it to the market to mark its preference. we scored some success in lengthening the domestic debt profile of central government. a new instrument – 273 - day treasury bills – was introduced to widen the maturity spectrum of available instrument and we succeeded to garner a smooth upward - sloping yield curve, which among other things, is expected to benefit the development of a corporate bond market by enabling market participants to price their financial products. we have noted that banks, in general, have a tendency to lean on a buy - and - hold strategy when they purchase government treasury bills. the marked preference of banks for official paper, even at the cost of driving down yields in the preferred part of the spectrum, and a growing risk aversion, have impeded the growth of credit and have prompted us to introduce a new tool in the form of a cap on banks ’ holdings of treasury bills in their banking books in bis central bankers ’ speeches april 2011. this cap was initially set at 20 per cent of daily average rupee deposits and tightened further to 18 per cent as from july 2011. there is no limit on banks ’ holdings of treasury bills in their trading book. you will note that while most central banks impose a minimum holding of liquid assets, we were bold enough to prescribe a maximum imposable limit on the premise to encourage banks to direct loanable funds towards extending more credit and also, to promote the long - awaited development of the secondary market. my eighth point relates to our action on the foreign exchange market. for an import - dependent economy which does not grow its own food and which imports its fuel,