Central Bank of Mauritius completes 50 years: A glimpse of its monetary and banking history…

The Central Bank of Mauritius completed 50 years recently and inaugurated a money museum named after their first Governor.

Th current chief Mr Rameswurlall Basant Roi gives a terrific speech on the occasion covering both monetary history of the region and the future with crypto currencies. Though, one has read some interesting speeches from previous Governor Bheenick as well

He points how  Mauritius had its own era of free banking:

It is expected of me to look back with you all into the 50 years of history of central banking in Mauritius on this very special occasion. It’s beyond the scope of this address to cover so many years of achievements – and failures – in a few paragraphs. I will limit my address to some key institutional aspects of the Bank over its 50-year history. But before I do so, let me go back to the first half of the 19th century when Mauritius had entertained a regime of free banking, meaning that anybody could start a banking business with limited capital in an environment free of regulation. Each bank was allowed to issue its own banknote in the same way as private individuals are liberally issuing bitcoins and altcoins today. Because, amongst other things, banks used to issue banknotes and coins more than necessary, bank failures were a common feature. The concerns for financial stability were so pre-occupying that the then Government had decided to establish in Mauritius the Board of Commissioners of Currency in 1849 – the first in the world.

A mild version of regulation of banking activities was introduced thereafter. By the way, this crisis and crisis resolution story of ours is similar to the one that had led to the establishment of the US Federal Reserve System in 1913. The rupee became our national currency in 1877. The exchange rate of the Mauritian rupee was set at Rs2.00 for US$1.00. Soon after the Second World War, Mr Fernand Leclézio, one of the richest man in Mauritius sold his sugar estate to settle down in Europe. The transfer of the sale proceeds was so large that it had worsened our balance of payments position and the foreign currency reserves of the country suffered a troublesome drain as a result. Expeditiously, the then Government had introduced exchange control which, after more than two centuries, brought to an end an era of unrestricted transfers and payments for international trade transactions and free capital convertibility. It was 1951. The Treasury Department of the Government was made in charge of the Exchange Control Office.

In the context of the Bank of Mauritius Ordinance 1966, some of these functions were hived off to the Bank of Mauritius. On July 1, 1967, Governor Aunauth Beejadhur assumed office. The functions of the Board of Commissioners of Currency were vested with the Bank, a month later, in August 1967. Equipped with an exchange control office, an office for the day-to-day basic banking operations and an administration department, the Bank became officially operational on September 2, 1967. Thus began central banking in Mauritius, just over six months before independence in March 1968.

Barely two months through the business of central banking the Bank faced its first tough challenge – a kind of challenge that any central banker used to feel extremely uncomfortable in the days of the Bretton Woods fixed exchange rate regime. Great Britain, under the then Prime Minister, Harold Wilson, devalued the Pound sterling, to which the rupee was pegged at Rs13.33 by 14 per cent in November 1967. It was the first significant price shock to the Mauritian economy after the establishment of the Bank of Mauritius. The Bank had steered through successfully. Governor Aunauth Beejadhur was tested right at the very beginning of his tenure of office.

Superb…

He being a central bankers obviously does not approve cryptocurrencies but does not dismiss it totally.

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