But we need to be careful to give the world confidence that we will conduct policy in a manner that will keep inflation expectations stable, at low levels. Second, to fiscal policy. We now face a substantial and unsustainable gap between our fiscal commitments and our resources, not just over the longer term with respect to Social Security and Medicare, but also with respect to budget projections for the coming ten years. Reducing this gap to a more sustainable level is vital. The decisions we make this year and over the next few years will be important to building more confidence that we have the will to act in a manner commensurate with the challenge. Achieving a substantial and sustainable reduction in our fiscal imbalance is important to decrease the risk of lower future growth in private investment which could dampen future productivity gains. Reducing our fiscal imbalances is also important for reducing the risk of adverse shocks to financial markets, and for maintaining the willingness of investors to invest in our economic future. Improving the credibility of our commitment to this fiscal challenge is the most important contribution we can make towards improving the chance of a more benign adjustment in our external imbalance. Third, the U.S. and the major economies have an important role to play in guiding further evolution in the international monetary system. Policy makers in Asia are well aware of the complications and costs involved in sustaining their current regimes. Many are moving toward more flexibility in their exchange rate regimes.

Muhammad bin Ibrahim: Towards resilience - are we on the right path? Keynote address by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian Insurance Summit (MIS) 2017 "Towards Resilience: Are We on the Right Path? ", Kuala Lumpur, 30 October 2017. * * * Nearly 30 years ago, the Governor of Bank Negara Malaysia highlighted several challenges facing the insurance industry in Malaysia at the “Malaysian Insurance Industry Seminar” organised by the Malaysian Insurance Institute (MII). He made four observations in his speech: Insurance companies accounted for only 3% of the assets of the Malaysian financial system. Only 1 in 10 Malaysians had a life insurance policy. Foreign insurers were at best, agents for their head offices. There was no urgency to develop local underwriting and management expertise. Due to lack of local technical expertise, the sector was significantly dependent on the international reinsurance market. This in turn curtailed the development of local expertise, perpetuating a vicious cycle. A “Stock-take” on the Insurance and Takaful Industry’s achievements and shortcomings In the decades since, the Bank has implemented major reforms to strengthen market participation, improve transparency and professionalism in sales practices, and encourage the development of domestic underwriting capacity to optimise retention of reinsurance and specialised risks. In 2009, foreign equity participation in the sector was liberalised further. After almost three decades of BNM taking over the task of regulating the insurance industry, it is worth for us to do a brief stock take.