Decision makers in Mauritius rightly bent with the then prevailing wind of change. Direct controls on interest rate determination, ceilings on bank credit expansion and exchange control were done away with. With hindsight, it appears that the wideranging implications of the move from a system of direct controls to a fully liberalized financial system have not been fully appreciated.
Financial sector liberalization imperatively requires monetary discipline, fiscal discipline, financial market discipline, labour market discipline and very importantly a sound and solid financial industry. These requirements are all, in one way or the other, closely related.