newly issued international sovereign bonds to reduce the disruptiveness of sovereign debt restructuring. nevertheless, with huge amounts of debt in us dollars being created around the world without liquidity backstops, we are still far from having a global lender of last resort adequate for our times. without properly addressing this issue at the global level, we run the risk of a durable fragmentation of the international system. conclusion let me conclude. global challenges require both domestic and global responses to ensure that the global financial system becomes more resilient. important steps in the right direction have recently been taken on both fronts, albeit admittedly, many of these innovations have not yet been fully tested. we should not be complacent. in many ways, the present challenges to the global economy place the monetary and financial system at a sort of crossroads. we should not underestimate the challenges of living in the ever more closely interconnected global economy. i thank you for your attention. references ahmed shaghil, stephanie e. curcuru, francis warnock and andrei zlate, 2015, presented at the conference “ divergent monetary policies, global capital flows and financial stability ”, hong kong 15 october 2015. aizenman, joshua, mahir binici and michael m. hutchison, 2014 : “ the transmission of federal reserve tapering news to emerging financial markets ”, nber working paper, no. 19980. see haldane ( 2014 ) and fischer ( 1999 ). bis central bankers ’ speeches bank for international settlements, 2015 : “ bis quarterly review – international banking and financial market developments ”, march. banerjee, ryan, michael devereux and giovanni lombardo, 2015 : “ self - oriented monetary policy, global financial markets and excess volatility of international capital flows ”, mimeo. bekaert, geert, marie hoerova and marco lo duca, 2013 : “ risk, uncertainty and monetary policy, ” journal of monetary economics 60 ( 7 ), 771 – 788. bernanke, ben s. and mark gertler, 1995 : “ inside the black box : the credit channel of monetary policy transmission. ” journal of economic perspectives 9 ( 4 ), 27 – 48. borio, claudio and haibin zhu, 2012 : “ capital regulation, risk - taking and monetary policy : a missing link in the transmission mechanism? ” journal of financial stability 8 ( 4 ), 236 – 251. brunnermeier,

capital adequacy ratio stood at 242 % at the end of the first quarter of 2010, well above the benchmark supervisory target of 130 % set under the rbc framework. total net premiums and contributions for insurers and takaful operators grew by 8. 2 % during 2009. this was driven by growth in the ordinary life segments of the life and family takaful industry, and a broad - based demand in the general sector. also of significance is that insurers in malaysia have performed considerably well in managing and responding to the challenges of lower investment returns and the lower interest rate environment following the global financial crisis. also notable is the rapid progress of malaysia ’ s islamic financial industry which has become a competitive sector and one of the key drivers of economic growth in the country. as malaysia evolves and emerges as a major international islamic financial hub, bank negara will continue to play an active role in promoting islamic financial products and services, supporting the enhancement to the payment infrastructure and progressively deregulate and liberalize the financial system. more recently, the liberalization to allow for greater foreign participation in the domestic financial markets will create further international linkages for malaysia ’ s islamic banking and takaful industries. as malaysia moves into the next stage of economic development, by transforming from a mainly production - based economy to a more innovation - driven and knowledge - based economy, the financial services sector will play a prominent role in this evolution. in support of this transformation, bank negara malaysia is developing a new blueprint for the financial services sector. this blueprint will chart the next phase of the development of the financial sector, position the financial sector as one of the main catalysts for the transformation of the malaysian economy and ensure our economy remains robust and resilient to respond to any emerging risks. risk management for insurance institutions it is expected that the financial sector in malaysia will expand and become more complex and inter - connected over time. therefore, the corporate governance and risk management practices in insurance institutions will also need to evolve to keep pace with the fastchanging environment. it is a fact that institutions which performed better during the crisis were consistently differentiated by more robust governance and risk management practices. according to a recent towers perrin survey of major u. s. corporations, failure in risk management has been cited to be the key characteristic of financial institutions that suffered large losses during the global financial crisis. thus, improving risk management was the top priority of cfos in reaction to the global