In effect, the existing regulatory departments will be transformed into new departments with respective responsibilities for financial sector development, prudential policy, consumer protection and market conduct, and financial surveillance across both the banking and insurance sectors. The supervisory functions will similarly be integrated for financial service groups that include both banks and insurance companies under their umbrella. We believe this organisational change will deliver a more comprehensive overview and cohesive approach to the development of the financial system, while facilitating a clear distinction between the objectives of prudential regulation and financial stability, and the broader developmental objectives. It will also sharpen the regulatory focus on the management of risk in the financial system in a manner that will more effectively address the basic components of credit, market, operational and insurance risks. For the regulated institutions, this new structure is also intended to promote greater efficiency and competition in the financial system by:•  minimising regulatory overlaps and duplication within the system;  •  preserving regulatory neutrality in the management of similar risks between different financial service providers; and  •  ensuring more efficient use of regulatory resources. The Bank will be communicating the details of the new structure to the licensees in November and December this year. A smooth transition will be ensured to maintain continuity in the major ongoing regulatory initiatives currently being undertaken by the Bank, and clear arrangements will be made for dealings between licensees and the Central Bank during the transition.

Zeti Akhtar Aziz: Strategic positioning in a changing environment Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 2006 Dialogue Session with Insurers and Takaful Operators, Kuala Lumpur, 22 August 2006. *  *  *  In a rapidly changing environment, rethinking the future and strategic repositioning needs to be a high priority agenda. Strategic positioning is not only necessary to deal with the new emerging challenges but more importantly, it needs to be part of the process that will shape the future. The changes taking place are on several fronts. •  Nations are becoming increasingly inter-linked and integrated in a more globalised environment. •  The Malaysian economy continues to experience significant structural shifts into new areas of growth and comparative advantage. •  Consumers are becoming increasingly discerning in terms of the range and quality of financial products and services. •  The financial system is transitioning into a more competitive environment as institutional arrangements become increasingly more deregulated and liberalized. •  Technological advancement has enabled greater innovation in the development of financial products and services, operational processes and delivery channels. •  The regulatory and supervisory approaches to maintaining financial stability are becoming more principle and risk-based. With these changes intensifying, it is timely to reflect on the emerging issues for the insurance and takaful industry.