In a recent update, the Bank of Mauritius has made significant strides in its initiative to introduce a central bank digital currency (CBDC), gearing up for a pilot project slated to kick off in the upcoming months. Harvesh Seegolam, the Governor of the Central Bank of Mauritius, underscored the advanced progress of their work, signaling the commencement of the experimental phase.

The decision to explore a digital version of the Mauritian rupee was first announced in 2019. Since then, the island nation has embraced financial technology, even amending existing legislation to facilitate the issuance of digital banking licenses by the central bank. Mauritius also aims to position itself as a hub for multinational corporations seeking to establish their treasury headquarters, diversifying its financial services sector.

Governor Seegolam emphasized the bank’s proactive approach to adopting new technologies, while also acknowledging the potential risks associated with rapid advancements in fintech. He stressed the importance of thoroughly understanding the potential impacts on economic activity, financial stability, reputation, and inflation.

Furthermore, Mauritius intends to market itself as an attractive destination for multinational companies looking to set up regional treasury headquarters, leveraging its modern and efficient financial services sector.

While most of Governor Seegolam’s statements revolved around the growth of financial markets and digital transformation, he made a notable mention of the central bank’s significant reduction in foreign exchange market intervention. Since the beginning of the year, the bank has scaled down its intervention to $164 million, a substantial drop from the $622 million recorded during the same period in 2022. He reassured that despite this reduction, the Bank of Mauritius remains ready to support the foreign exchange market if the need arises, particularly during the year-end inventory accumulation period.