harvesh seegolam : banking resilience - global and domestic perspectives keynote address by mr harvesh seegolam, governor of the bank of mauritius, on the maiden edition of the bank of mauritius thought leadership series on “ banking resilience : global and domestic perspectives ”, 23 july 2021. * * * first deputy governor second deputy governor chairman of omfif members of the bank of mauritius advisory committee chairperson and ceo of the mauritius bankers association ceos of banks ladies and gentlemen a very good morning and afternoon, depending from where you are joining us today. it is my pleasure to welcome you all to this maiden edition of the bank of mauritius thought leadership series. an initiative that the bank is bringing to the banking community and other stakeholders in general, on topical matters in this fast changing world in which we are today living. i wish to thank the omfif for partnering with the bank of mauritius for this inaugural edition. the bank ’ s thought leadership series will allow us to gain from the precious insights of worldacclaimed experts and personalities on key topics impacting, directly or indirectly, the banking and financial world. it will serve as an ongoing platform to generate ideas on how we need to adapt or re - adapt ourselves and our value propositions. this becomes even more important for highly open small - island economies, like mauritius, dependent on tourism and financial services. the bank of mauritius will make its thought leadership series a regular feature on topical matters. our choice of the theme for the debut of the thought leadership series – banking sector resilience : global and domestic perspectives – is explained by the importance of preserving stability and resilience of the banking and financial system amidst the global covid - 19 pandemic that has struck us since march last year. as a matter of coincidence, i started my governorship at the bank of mauritius with the outbreak of the pandemic. this theme is attracting significant attention globally. the bis, imf, oecd, omfif and many central bankers are relentlessly reflecting on how best to maintain stability and resilience of the banking sector. i am more than determined to continuously engage with our international partners as well as our local stakeholders in this ongoing reflection exercise. my objective has been to ensure that our banking and financial system stands the test of this unprecedented crisis that mauritius is facing. maintaining trust and confidence in the banking sector is a very high priority on my agenda. the more so that sound banks

2½ years after the cyclical change. inflation is still being restrained by the fall in prices for imported consumer goods, increased competition in a number of markets and the current period of lower nominal pay increases. the trend in prices for consumer goods over the past two or three years is a result of favourable developments in the norwegian and global economies. low inflation is being accompanied by real income growth and a rise in production. it cannot be ruled out that small open economies are particularly vulnerable to fluctuations in international prices. deviations from the inflation target in norway are broadly in line with sweden and new zealand, but are larger than for example in the uk and canada. developments in recent years have also been influenced by the fairly large favourable disturbances to which the norwegian economy has been exposed. developments in norway ’ s terms of trade provide an illustration of this here. as consumers, we enjoy the benefits of falling prices for many imported goods. as a nation, we benefit from a fall in prices for the goods we import in relation to prices for the goods we export. norway ’ s terms of trade are improving. the impact of the rise in oil and gas prices is particularly strong – and the domestic economy is shielded to a certain extent through the oil fund mechanism – but there have also been terms - of - trade gains in the mainland economy. the situation in norway differs from that of our nordic neighbours. it should also be noted that the figures for the twelve - month rise in consumer prices are considerably more volatile in norway than in other countries. we see from the figures that consumer prices in norway, even when tax changes and energy products are excluded, are more volatile than indices in other countries where these products are included. low inflation is not the result of declining demand, activity or employment. in our conduct of monetary policy, we weigh the objective of stabilising inflation close to 2½ per cent over time against the objective of stable growth in output and employment. since inflation is low, we have chosen to keep the interest rate at a low level and have at times considered an even lower interest rate. however, as the norwegian economy has shown solid growth since summer 2003, we decided instead to use some time to bring inflation back to target. in a period of increasing cross - border labour flows, substantial technological advances, changes in competitive conditions and new trading patterns, we may, with our very open economy, have to accept a somewhat greater variation in inflation and deviations from the target, as we have witnessed over the