Banking Revolution: BoM Unleashes Innovation Hub

The Bank of Mauritius has launched an innovation center aimed at promoting innovation and the adoption of cutting-edge technologies in the Mauritian banking sector.

The center will facilitate brainstorming sessions, hackathons, and exploratory programming sessions to drive industry progress.

The launch of the innovation center is scheduled for September 4th. Harvesh Seegolam, the Governor of the Central Bank of Mauritius, explained that the center will be supported by other regional central banks, which will share and solve their problems to ensure the region does not lag behind in innovative practices and processes.

The Governor of the Central Bank participated in a protocol meeting during the “Digital Finance in Africa” conference organized by the Regional Centre of Excellence and the Organisation for Economic Co-operation and Development (OECD) on June 20th.

“This innovation hub is an initiative taken by several central banks around the world. We want to show that we have the potential in Mauritius to come up with solutions in the digital world to improve financial and banking services.

Other governors in the region have been invited to join this initiative and use our innovation hub to solve regional problems, thus keeping Mauritius a leader in innovation and banking,” said Harvesh Seegolam.

Digital Currency

The Central Bank of Mauritius has made progress in its research for implementing a digital currency and has launched a pilot project with a commercial bank in January.

Harvesh Seegolam mentioned that a series of pilot projects is planned. “After that, we will determine how the digital currency will be launched in Mauritius,” he explained.

Amendment to BoM Act

The Monetary Policy Act will be amended to improve the operational independence of the regulatory body.

Decisions made by the Central Bank of Mauritius are taken independently, according to Harvesh Seegolam.

During the crisis period, authorities and the central bank had to look in the same direction. “All central banks did so without exception.

This does not mean we lost our independence. It was the philosophy of the central bank,” he said.

However, he added that several central banks are analyzing how to further improve operations and strengthen laws that will enable them to push forward this independence.

A new BoM Act will soon be introduced, with the Central Bank consulting international agencies such as the International Monetary Fund (IMF).

Return to Normalcy for Foreign Exchange Market

The total FX inflows in 2023 compared to 2019 indicate a return to normalcy for the foreign exchange market, according to Harvesh Seegolam.

He stated that the level is roughly the same as before. After two years of crisis that affected foreign exchange inflows, this year’s beginning shows a progressive return to normalcy.

The Central Bank of Mauritius monitors foreign exchange market operations daily and will intervene if necessary.

Debt and Obligations

Dr. Carmine Di Noia, Director of Finance and Enterprises at OECD, acknowledged that debt is a major problem worldwide.

There is a significant amount of sovereign debt and corporate obligations worldwide, approximately $100 trillion. However, debt and obligations are not necessarily a negative issue.

“The role of savings bonds is important, especially during a crisis. We have entered a new era of monetary tightening. It is likely that central banks will no longer buy sovereign bonds,” he explained.

In the next three years, a large number of sovereign bonds and corporate bonds will mature, making refinancing these debts difficult, warned Dr. Carmine Di Noia.

“There will be an absorption problem. We must examine this issue carefully.”

Central Bank of Mauritius’ Predictions for 2024

Harvesh Seegolam stated that an inflation rate of 4.9% will allow them to position themselves within the 2-5% range. This is figure aligned with projections from the International Monetary Fund. The new monetary policy framework contributing to reducing inflationary pressures in the country.

Source: Defi Media