The central bank’s capital and reserves have to be strong enough to be able to sustain repeated intervention in the money market. Given the uncertainty surrounding the nature of capital inflows, it would also be prudent for the central bank in a small open economy to build up reserves as a cushion against a possible reversal of capital flows.
Presently, we have Treasury and Bank of Mauritius Bills with maturities of 91 days up to 364 days. Treasury notes with maturities of 2, 3 and 4 years and bonds with maturities ranging from 5 years to 29 years are issued on a regular basis. Lately we have introduced a 14 day Special Deposit facility.