Regional Cooperation

7 Regional Cooperation

SOUTHERN AFRICAN single central bank and currency at continental DEVELOPMENT COMMUNITY level. These views were in line with the (SADC) conclusions and policy recommendations of the study undertaken by the Bank on “Establishing a Monetary Institute for the SADC Region as an he Thirty-Fifth and Thirty-Sixth meetings Interim Step Leading to a Monetary Union” and of the Committee of Central Bank presented at the April 2013 CCBG meeting. T Governors (CCBG) were held on 14 September 2012 and 26 April 2013, respectively Other critical issues raised by Governors in Pretoria, . were: (a) poor communication among member states and SADC structures as well as In December 2012, the CCBG held a within countries regarding the status of the Strategic Session to review all programmes and implementation of various projects; (b) concerns projects undertaken by the CCBG structures around the quality and reliability of data being in the implementation of the Finance and provided in SADC, especially with regard to Investment Protocol (FIP) and Regional Indicative the comparison required for macroeconomic Strategic Development Plan (RISDP). convergence; and (c) discussion of a constructive approach to ensure that China’s participation in At the end of the Strategic Session and the SADC economies is in line with the SADC CCBG meetings, Governors concluded that: objectives. (a) SADC countries needed to come up with a common approach to respond to a global crisis Among the joint initiatives between the if it were to recur; (b) a common and gradual CCBG structures and the SADC Secretariat approach was required to strengthen and are the review of the FIP and the RISDP. The harmonise the financial sector without putting FIP baseline study and dashboard have been emphasis on achieving a monetary union in approved by Governors for implementation. the short-term; and (c) the establishment of the With regard to the CCBG structures, Governors African Central Bank by 2018 was not achievable agreed that their structures were sufficient for given the experiences of the euro area, the the implementation of the FIP processes. The clashing of macroeconomic convergence coordination of the meetings of the Ministers programmes of both the SADC and the African of Finance and Central Bank Governors Union (AU) and the unrealistic timelines set in remains a critical intervention required in the both programmes. implementation of the FIP and the SADC agenda. At a workshop held in February 2013 Governors agreed that these concerns in Pretoria, the CCBG subcommittees identified should be shared and discussed with SADC several challenges that had impeded the smooth Ministers of Finance and Heads of States. A implementation of the RISDP including timelines SADC representation will also be communicated and milestones. The preliminary report on the to the AU and Association of African Central findings has been circulated among member Banks which are spearheading the project of a states in June 2013.

BANK OF Annual Report 2012-13 73 Regional Cooperation

The SADC Subcommittee of Banking countries legal systems, financial sophistication Supervisors recommended member states and capacity as well as the diversity of national to develop guidelines in line with international experiences. standards to monitor (i) international financial reporting standards; (ii) the Basel Core COMMON MARKET FOR EASTERN Principles; (iii) capital core requirements; and (iv) AND SOUTHERN AFRICA (COMESA) sensitisation on Basel III and macroprudential guidelines. The Eighteenth Meeting of the Common The pilot project for the cross-border Market for Eastern and Southern Africa settlement system – the SADC Integrated (COMESA) Committee of Governors of Central Regional Electronic Settlement System – will Banks was held during 11-12 December, be tested in the Common Monetary Area (CMA) 2012 in Kigali, . Governors noted that countries on 22 July 2013. Full implementation the REPSS had started live operations on 3 in the rest of SADC will be gradual and will occur October 2012 and registered its first transaction when regional central banks and commercial between Bramer Banking Corporation Limited banks are ready to join the system. of Mauritius and Fina Bank of Rwanda, through their respective central banks. With a view to promoting its utilisation, they extended the FINANCIAL STABILITY BOARD period of transacting on REPSS free of charge REGIONAL CONSULTATIVE till 30 September 2013 and urged all central GROUP FOR SUB-SAHARAN banks to carry out sensitisation campaigns. AFRICA Regarding progress made towards achieving macroeconomic convergence in COMESA in The meetings of the Financial Stability 2011, Governors observed that member states Board (FSB) Regional Consultative Group were facing challenges to attain the fiscal and (RCG) for Sub-Saharan Africa are held twice a inflation criteria. However, member states were year. The challenges and vulnerabilities of the making good progress in the following areas: region together with the possible policy options (a) compliance with the secondary criteria as remain at the forefront of the agenda. These regards the use of indirect monetary policy then serve as input into the deliberations of the instruments; (b) moving towards market FSB Plenary. The initial set-up which comprised determined exchange rates; (c) adherence to nine members has been enlarged to include the the 25 Core Principles of Bank Supervision Central Bank of West African States. The second and Regulation; and (d) adherence to the Core and third meetings of the FSB RCG for Sub- Principles for Systemically Important Payment Saharan Africa were held in September 2012 Systems. and February 2013, respectively. The topics focused inter alia on regional vulnerabilities, Governors approved the Medium-Term unintended consequences of regulatory reforms Strategic Plan of COMESA Monetary Institute on emerging market and developing economies, and urged mobilisation of resources from key financial sector reforms for Sub-Saharan within member states and from cooperating Africa, resolution of financial institutions and partners for the implementation of the Plan. macroprudential framework and policy in Sub- They also approved the Work Programmes for Saharan Africa. Other countries are being the Monetary and Exchange Rates Policies and encouraged to join the RCG as the pursuit of Financial System Development and Stability global financial stability necessarily entails Subcommittees for 2013. They urged central taking into account the differences across banks to develop sound macroprudential policy

Annual Report BANK OF MAURITIUS 74 2012-13 Regional Cooperation

frameworks and human skills in this area. The National Bank of Rwanda and the Reserve Bank of were elected as the next Chair and Vice-Chair of the Committee of Central Bank Governors, respectively.

ASSOCIATION OF AFRICAN CENTRAL BANKS

The Thirty-Sixth Ordinary Meeting of the Assembly of Governors of the Association of African Central Banks (AACB) was held in Algiers, , on 30 August 2012. The Assembly of Governors took note of the draft report on the implementation of the African Monetary Cooperation Programme in 2011. While expressing concerns about the impact of external shocks on countries’ performance under the convergence criteria in 2011, Governors agreed that it was not necessary to modify the criteria and encouraged member countries to continue efforts to reinforce macroeconomic convergence. The Assembly took note of the revised terms of reference of the Community of African Banking Supervisors (CABS) and invited the Executive Secretariat and the Secretariat of Making Finance Work For Africa to organise the inaugural meeting of CABS as soon as possible. It was agreed that the theme for the 2013 AACB Symposium would be “Financial Inclusion in Africa: The Challenges of Financial Innovations for Monetary Policy and the Stability of Financial System”. “The Role of Central Banks in the Promotion of Sustainable Economic Growth in Africa” was selected as the theme for the Continental Seminar in 2013. The Assembly of Governors elected the Banque d’Algérie and the Bank of Mauritius, as the Chair and Vice-Chair of the AACB for the period 2012-13.

BANK OF MAURITIUS Annual Report 2012-13 75