Central Bank of Seychelles celebrates 40th anniversary

The Central Bank of Seychelles was established on 1st Dec 1978 as Seychelles Monetary Authority:

Central Banking in the Seychelles started as far back as 1936, with the establishment of the Seychelles Currency Board, similar to other British colonies of the time. The Seychelles Notes Ordinance and the Coinage Ordinance of 1936 bestowed the responsibility for the issue and redemption of Seychelles currency on the Colonial Secretary and later, with the Financial Secretary, acting as Currency Commissioner.

…..

The weaknesses of the Currency Board were uncovered by its inability to adapt and assume control over a rapid expansion of the domestic banking sector in the seventies brought about a by a boom in tourism. With the Board having no mandate to undertake monetary policy, adherence to a fixed exchange rate regime, implied that the domestic money supply would fluctuate according to the flows of external capital. This situation was as expected not favourable to stable and sustainable economic development. As a result, in August 1976, an International Monetary Fund (IMF) Mission at the invitation of the Seychelles government undertook a study of the financial system and recommended structural and operational improvements in the Currency Board system.

Following IMF recommendations the government firmly decided to create a central banking institution to regulate money supply, to supervise the banking system and generally to foster financial conditions conducive to orderly and balanced development. . However, given the rudimentary structure of the financial system and the lack of local expertise, it was decided that, as an interim step, a Monetary Authority be set up, with the establishment of a fully fledged Central Bank planned for a later date. Hence, on November 24, 1978 the Seychelles Monetary Authority Decree was enacted and the Seychelles Monetary Authority (SMA) was founded under this decree on December 1, 1978. All the responsibilities, as well as the assets and liabilities of the Currency Fund established under the Seychelles Currency Act, 1974 were transferred to the Authority.

The SMA functioned very much like a Central Bank. The 1978 Decree empowered it with the necessary tools to enable it to achieve its objectives. These included (but were not limited to) the issue of currency, the management of external reserves, banker and lender of last resort to government and commercial banks and inspection of banks and other financial institutions. The most important difference with its predecessor was that the Authority was given the responsibility for monetary policy, thus enabling it to set monetary instruments such as interest rates and credit controls to achieve certain desired objectives. However, the 1978 Decree provided for a Board of Directors comprising of three members; one of whom was the Permanent Secretary of Finance; another being the Accountant-General; and the third being any person as may be appointed by the President. This was to ensure that the Authority consult closely the government, mainly the Department of Finance, in its capacity as Financial and Economic Advisor.

On the 40th anniversary, the central bank organised an exhibition and its Governor Ms Caroline Abel said:

The title of our 40th Anniversary Exhibition, “A modern Central Bank with a Focus on Financial Empowerment”, speaks to the new challenges that we are
tackling. While our objective to promote domestic price stability, our vision to become a model Central Bank and our mission to contribute towards the
economic growth and development of Seychelles, all remain unchanged, we are keenly aware that we need to constantly evolve to meet public expectations
and to keep abreast with innovation in the financial sector. It is of utmost importance that as a Central Bank, we modernize the way we deliver our
mandate and ensure that we provide the public with the capacity to understand the newer products and services that are at their disposal, to enable them to
make informed decisions.

Governor Abel also explained its future strategy.

Nice bit..

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: