of mauritius threw his weight in the game and gave the kick - start for an innovative approach of treasury management. the domestic money and foreign exchange markets wherein millions of us dollars are traded today started right then and there. it ’ s in the best interests of our financial industry and, by extension, to the economy as a whole that these two markets grow healthily at a sustainable gait, without which the effectiveness of monetary policy transmission mechanism is seriously impaired. one of the most important contributions made by the bank of mauritius in the past seventeen years finds its roots in a fundamentally important amendment to the bank of mauritius act in 2004. the dual licensing regime, one for offshore banking and the other for domestic banking, introduced in 1988 before the launching of offshore banking in mauritius in 1989, was done away with ; it was replaced by a single banking license regime. the removal of the regulatory wall between offshore banking activities and domestic banking activities was a turbo - charged enabler of the widening and deepening of the domestic money and foreign exchange markets. isn ’ t awesome that the foreign exchange reserves of the bank of mauritius have gradually risen to a record level of about us $ 5 billion despite consequential declines in export proceeds over the past 6 / 7 bis central bankers'speeches several years? no importers, no mauritian travelling abroad, no student studying abroad has had any problem of foreign exchange for ten years unlike it often used to be in the past. the mauritian economy has had ten years of enduring stability in the domestic foreign exchange market. we often take this for granted and insult the man, the institution that gave the country this precious gift of stability. that stability, indeed a very rare gift to any economic system for so long a time, ought to have been taken full advantage of for purposes of durable social and economic development. there are risks of instability in the offing that hopefully will be effectively tackled by the bank and other agencies in the years ahead. thus far, the bank has taken the stand that if the risk - taking behaviour of financial institutions cannot be regulated perfectly, it must impose some kind of prudential ratios to curb the volume of transactions. otherwise the bank would commit the same fallacy as gun control opponents who argue that “ guns do not kill people, people do ”. as we are unable to regulate fully the behaviour of gun owners, we have no choice but to restrict the circulation of guns more directly. in an ever changing technological environment, new risks, new

facing numerous challenges throughout the 1970s. the external economic environment was far from being hospitable to countries in a state of under - development. the breakdown of the bretton woods system had given rise to serious disturbances. the unprecedented oil price shocks of 1973 and 1978 had 3 / 7 bis central bankers'speeches unleashed destabilizing forces the world over. authorities were learning for the first time since the end of world war ii how to cope with a situation never seen before and resolve new problems posed by the two traumatizing events. the world economy had dipped into its worst economic recession since the end of the post - world war ii. stagflation, a state of high inflation rates and no growth, characterized the world economy. governments and central banks the world over were having a very hard time resolving problems never known before. in mauritius, recurrent strikes by trade unions, demands for higher wages and salaries, recurrent inclement weather conditions, high inflation rates fueled by high prices of oil and high unemployment rates were certainly not ideal conditions for a take - off to self - sustained growth. it was a decade of restlessness and crises in many respects. admittedly, the economy did however undergo meaningful transformation. policy mistakes were made. right policies would have lessened the pains economic adjustment later. there are great lessons that all of us need to draw from the policy mistakes of the past. if we don ’ t learn from our experience, we ’ ll never learn at all. i was dismayed to see how the honest economist became a lonely voice of reason, and thus, a very valuable voice, but ignored most of the time arrogantly rather than nonchalantly. ultimately, society, in particular the less privileged class, paid the price of the policy mistakes and arrogance of the charlatans. it cannot but be appropriate – indeed very appropriate – at this juncture of my address this evening, to underline that the then bank of mauritius act had an abhorrent sentence that read as follows : “ the minister may from time to time give such directions to the bank as, after consultation with the governor of the bank, he considers necessary in the public interest. ” even where directives were not formally issued, the bank was required to seek the nodding approval of the minister on many policy matters. obviously, the bank was not an independent organization. having gone through the trials and tribulations in the field of monetary policy making for years and spent a greater part of