as well as being attracted to bahrain by our comprehensive and transparent regulatory framework, these firms also tell us that they are drawn here by the maturity and efficiency of our financial markets. bahrain has also become one of the world ’ s primary locations for islamic finance. we host the largest concentration of islamic banks in the world – currently they number 27 – as well as many islamic insurance and fund management businesses. important standard - setting bodies for islamic finance, such as the “ accounting and auditing organisation for islamic financial institutions ” and the “ international islamic finance market ”, are located in bahrain. the bahrain institute of banking and finance is one of the pioneers in developing courses on islamic finance to develop a pool of trained professionals with the skills the industry requires. the skills and dedication of bahrain ’ s population is reflected in employment in the industry. almost two thirds of people working in the financial sector are bahraini nationals. this is testament to the skills, training, and work ethic exhibited by our population. looking now to the future, the financial services industry will continue to play a very prominent role in our economy. we realise that there are important lessons to be learned from the global financial crisis and we will certainly take notice of them. nonetheless, we believe that bahrain will continue to play a major role as the financial centre of choice for the middle east and north africa region. we will continue to encourage a diversified financial sector in which fund management and insurance will play an increasingly prominent role. in recent years we have already seen very strong growth in the insurance segment of our financial industry. premium income has grown at an average rate of 18 percent over the past five years, and the growth of takaful – sharia - compliant insurance – has been particularly notable. there is enormous potential throughout the region for sharia - compliant asset management and insurance businesses. encouraging the growth and diversification of the financial sector is a major plank in the kingdom ’ s 2030 vision. this is a strategy which sets out our ambitions for a well - diversified domestic economy for the post - oil era. it provides the unifying vision for a series of reforms that are already underway or which we plan to make in the near future. our aim is to further liberalize an economy that is already ranked the most free in the arab world. our liberalization strategy involves major reforms to a whole series of government institutions and key markets. for example, last year we became the first country in the gulf to abolish the sponsorship system, thus

rights. he says explicitly : “ every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. ” the “ invisible hand ” therefore cannot function in the total absence of government. indeed, apart from assuring the rule of law, smith saw two other functions for government : “ the duty of protecting the society from the violence and invasion of other independent societies ” and the “ the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain ”. against the backdrop of these brief reflections on the great adam smith, let me turn back to the specific question put to us. i have no doubt that together with a functioning rule of law and limited government intervention, free markets in general and financial markets in particular are the optimal path to the promotion of wealth. i am equally convinced that responsible behaviour has the best chances of flourishing in an environment of economic opportunities and rising standards of living. trust clearly enhances the rule of law as there will never be enough courts to permanently monitor all market transactions. modern means of communication and transparency, in turn, are trust - enhancing. think of seller and purchaser ratings on many internet auction sites. now, let me conclude my remarks with a final and in my view crucial note of caution. as charles kindleberger demonstrated convincingly in his 1978 book manias, panics and crashes, financial markets are prone to phases of irrationality and exaggeration. such market disequilibria lend support to the need for the rule of law and the utility of limited government intervention in a number of areas. i want to emphasize the word limited. notwithstanding adam smith ’ s own reference to government intervention, the role of government must remain a limited one. if temporary market imperfections or difficult market adjustment periods give rise to the justification for relentlessly expanding the role of government, there will be a point when markets will no longer function effectively and when welfare creation will seize to advance. there is no better breeding ground for irresponsible behaviour than an environment of economic stagnation or worse, welfare decline. there are times in history when the world economy undergoes fundamental structural change. with the rapid integration into the global economy of china and india, we are experiencing