Ordinary Bermudians will soon be flocking to play the world's stock markets, Finance Minister the Hon. David Saul predicted last night.

Profits on the investments would bring in enough cash to rival tourism and international business as earners of foreign currency, he told MPs.

But the PLP did not share Dr. Saul's vision of a third "leg'' for Bermuda's economy.

They warned against his scrapping of the 10 percent tax on foreign currency purchases, and cautioned Bermudians that stocks and shares were risky.

Dr. Saul said the chance of earning more foreign currency was especially needed with the bases closing.

Big firms like Belco did not have to pay the 10 percent, he said. Why should individuals? He was prepared to give up income from the tax -- about $2.5 million -- because the reward for all Bermudians could be so much greater.

He admitted the move was a gamble -- but the individual $25,000 overseas investment limit per year would stay for the time being.

Mr. Eugene Cox , Shadow Finance Minister, said: "We're not prepared to take the risk at this time.'' The PLP's Mr. Walter Lister said: "I would not like to see some senior citizen in our community go for this `third leg' to see if she could get more income, and get caught up in some bad investment.

"The stock market is a great place to get into, it's challenging, but it can be very. very dangerous.'' Dr. Saul agreed small investors should mainly stick to safer investments. But he did not believe only the rich would benefit from the move.

The tax change was passed.

Government last night succeeded in scrapping a seven percent cap on interest rates.

It overcame PLP objection to the Interest And Credit Charges (Regulation) Amendment Act 1994.

The bill was passed on a straight 21-18 split on party lines.

Dr. Saul said the move would benefit ordinary Bermudian mortgage holders.

But Opposition MPs believed it would open people up to the whim of market forces.

Shadow Finance Minister Mr. Eugene Cox feared someone deemed "a poor risk'' could be subjected to pay rates of up to 10 percent.

"He may be forced to pay a higher rate.'' Dr. Saul, however, told MPs the seven percent ceiling had proved a "psychological barrier''.

Lenders tended to push rates towards that ceiling -- increasing costs for people with mortgages.

Dr. Saul said Government wanted to bring rates down. And he believed removing the ceiling would help.

"I can wager that interest rates internationally will not go into double figures in this decade.'' Dr. Saul said he had been assured by financial institutions they would spread mortgage payments out further -- if rates rose a worrying degree.

And he pointed out Government still had the power to reintroduce the ceiling, should it be thought necessary.

He added: "The bill is going to be in the best interests of everybody in the Island.'' Dr. Saul explained that although the ceiling would be removed, the statutory seven percent rate would stay.

This statutory rate would be merely a guideline for courts, if they had to make a ruling.

During the debate, Dr. Saul also revealed the Monetary Authority would relax policies on overseas borrowing.