economy ’ s health and, at least, give ofdi the attention it deserves. again it is your leadership and vision in taking your corporations to the next frontier that will take us forward into this new paradigm. your corporations are the engines of this economy, and our economy needs a paradigm shift. i have noted that a few of our corporations have tentatively started venturing into foreign markets. the united arab emirates has been a particularly favored destination. i ’ ve seen many of our brands there, particularly from the textile industry. one of our conglomerates recently acquired a company in the north american market. we know a couple of our banks are extremely keen on entering the indian market. so yes, a few of our more daring enterprises have ventured outside their comfort zone, and i respect them for that. bis central bankers ’ speeches but there is a great deal more that needs to be done. and there is a great deal more that can be done. the current breed of pakistani ceos is the street - smart entrepreneur, who will learn to adapt to any environment. that is going to be our competitive advantage in the global market. once again the challenge is to put your skills to the test on the global stage. i am confident that you will create a new success story with each challenge. i would certainly be remiss in not pointing out that the world today is passing through a turbulent phase that requires a realignment of our leadership approach to managing businesses. today ’ s business leader is faced with a multitude of challenges, both on external and internal fronts. the complexities arising in the eco - system of any business may arise in the shape of macro economic imbalances that include sagging demand, inflation, volatility in financial markets, etc. while demanding situations on the internal front arise from personnel management, investment ambiguity that there are always complex matrices linking external challenges with internal ones and therefore, successful business leaders will never make internal business decisions in isolation. an uniformed business leader is a leader without a vision and quite likely without any success. like any real life crisis, the present turmoil in the financial sector provides an opportunity to learn from the financial world ’ s mistakes and overzealousness. this gives us the opportunity to look back and see what went wrong and structure our own financial houses so that this does not happen to us, or so severely affect the world again. in this regard i feel the most significant lesson that we have learnt from recent events is the importance of fundamentals in

( v ) finally, within regional context pakistan ’ s financial system despite its growth is still small. for instance, the financial system of other asian emerging financial market countries twice or three times larger in relative terms and the gulf states have now geared themselves into regional financial hubs. keeping in view these considerations, the state bank of pakistan ’ s ( sbp ) is now launching a ten year financial sector strategy. this strategy has been developed based on ( i ) a comprehensive assessment and evaluation of the banking system that helps draw key lessons ; ( ii ) pakistan ’ s forward looking economic development strategy and vision ; and ( iii ) learning from the emerging changes in global and regional financial architecture and financial advancement and innovation. this paper aims to capture the objectives and broad elements of the financial sector strategy which will be finalized and adopted by the third quarter of the 2008 after consultation with stakeholders. the scope of the paper is confined principally to reforms of banking sector and regulatory architecture which would require some principal changes or new legislation. the objective of the financial sector strategy will be to broaden and deepen the financial system to help pakistan : ( i ) achieve higher and sustainable economic growth, ( ii ) develop a dynamic, robust and stronger system, ( iii ) mobilize the domestic and foreign resources for private investment ( which has to be the key driver of the economy ), and ( iv ) deepen financial penetration for poor and underserved regions. prerequisite for financial sector growth is, however, macroeconomic and political stability and augmentation of the enabling policy environment in the real sector. assuming these preconditions are restored, the ten year strategy will ( i ) stimulate growth in financial assets to 165 % of gdp, growth in deposit base by 13 % to reach $ 217 billion, and advances to allow private sector credit / gdp ratio to rise from 27 % to 42 % ; ( ii ) be financially inclusive supporting the small savers and meeting the requirements of small borrowers in agriculture, housing, small and medium enterprises ( sme ) and microfinance sectors by raising financial penetration ratio through enabling policy environment and outreach expansion ( coverage of per bank branch to improve from 19, 000 to 15, 000 persons ). ( iii ) developing financial infrastructure and automation to enhance the coverage of automated teller machines ( atms ) to 10, 000 ; and ( iv ) reduce the systemic risks of the financial system by developing an adequate safety net for the small depositors and the central bank ’ s