This is evident with the significant three-fold increase in contributions of the product marketed through bancatakaful in 2005 which accounted for 20.4% of total contributions. Bancatakaful has contributed considerably to the increased penetration in the family takaful business, especially for single contribution takaful plans. We envisage significant inroads in the penetration rate of bancatakaful in future years in line with the positive trend shown by the conventional counterparts, where the bancassurance captured 45.3% of the new life insurance business premiums generated in 2005. Through efficient cost structures of bancatakaful and with the entry of joint-venture takaful operators involving banks and savings institution with extensive nationwide branch network, the takaful industry should maximize the potential of this alternative distribution channel. Finally, on the global front, Islamic finance has made significant inroads and has achieved growing global recognition. Another significant milestone in the progress of Islamic banking and finance as recently announced by Bank Negara Malaysia is the initiative to enhance the position of Malaysia as an international Islamic financial centre (MIFC). With the vibrant domestic Islamic financial industry that has become an integral component of the financial system, Malaysia is now well positioned to be an international centre of origination and issuance of Islamic financial instruments, fund and wealth management, Islamic financial activities in international currencies and takaful and retakaful businesses. As at year 2005, the total gross contributions from takaful business outside Malaysia recorded an insignificant proportion of the total contributions of the industry.

Thomas Jordan: Globalisation and financial markets – challenges and opportunities Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at ETH Alumni Engineering & Management, Zurich, 13 November 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the past few years, globalisation of financial markets has attained a remarkable level, exceeding that of goods markets in a number of respects. The future is likely to see considerable further development in this direction. In principle, the effects of financial market globalisation are positive. It leads to a higher level of efficiency in the international allocation of capital and allows for better risk distribution in investments. However, the globalisation of financial markets in Switzerland means that more companies are being taken over by foreign investors, while new risks arise in the case of investments abroad – risks that are difficult to quantify. The globalisation of financial markets confronts monetary policy with a dual challenge. On the one hand, it changes the way in which the monetary policy transmission mechanism works, and the interpretation of economic models becomes more difficult. On the other hand, external shocks have a greater impact on both domestic financial markets and the domestic economy. Consequently, globalisation of financial markets results in greater uncertainty in monetary policy and increases the necessity of monetary policy stabilisation by central banks.