rasheed mohammed al maraj : brief review of bahrain ’ s financial market developments speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the tradequest challenge awards presentation and luncheon, manama, 28 april 2007. * * * your excellencies, distinguished guests, ladies and gentlemen, good afternoon. assalam alaikum wa - rahmatullahi wa barakatuh it is a pleasure for me to be here today, and to show my support for the tradequest challenge programme. i should like to take this opportunity to thank all those who have supported this initiative, be they the financial community, the schools, or the participants and their parents. programmes such as these are collective efforts, and require the support of many. however, i should like to thank in particular the bahrain institute of banking & finance and the american association of bahrain, for their efforts in jointly establishing and managing this annual competition. special congratulations are of course also due to the students who took part in this year ’ s competition, for their commitment to learning about the world of financial markets and investment. before we start presenting the students with their well - earned certificates, i hope you will allow me if just say a few words about the significance of this programme, and its relevance to the development of bahrain ’ s financial markets. bahrain, as i am sure you are all aware, has a long and distinguished track record as the leading financial centre in the gcc. today, financial services accounts for almost 27 % of the country ’ s gdp, and creates an equally significant share of high value added employment in the economy. it is no exaggeration to say that the health of the financial services industry is of strategic importance to the continued economic well - being of this country. a key element in our success as a nation in this field has been the emphasis placed on developing our own human resources. international and regional institutions come to bahrain, in part, because there is a relatively strong supply of well qualified bahrainis whom they can hire. in turn, this country benefits from the wealth that is created by these financial institutions, and the training and experience gained in the workplace. fundamental to this human resources equation, is that we have people who understand finance and develop an interest in working in this industry. programmes such as these, therefore, play a valuable role in introducing young people to the world of finance, and hopefully giving them an interest in possibly pursuing a

, p2 ). since then there have been moves by central banks to impose greater disclosure on commercial banks and to ensure standardisation and definitional clarity around disclosed information. the reserve bank has required all banks to publish quarterly disclosure statements since 1 january 1996. markets function better with transparency of information ( e. g. mehran and mollineux, 2012 ), causing the cost of funds to financial institutions to better reflect their underlying financial strength. transparency is especially important when financial stability risks may be building, as “ communications can serve to align agents ’ incentives, to coordinate their expectations, and to steer their behaviour in a way that helps to prevent crises ” ( born et al ( 2012, p252 ). there may be occasions where complete transparency may work against the interests of financial stability, for example if a problem at a bank precipitated a run before the bank and the authorities had a chance to correct or at least clarify the problem. there are strong grounds, therefore, for seeing financial stability communication in normal times as different from that applying during times of crisis. in the event of an institutional failure or rescue, our decisions can of course be reviewed after the event. no rescue see jackman ( 2002 ). blinder ( 2008 p941 ) observes that studying central bank communications with the general public – in contrast to financial markets − is so far largely unexplored territory. however, perhaps reflecting the newness of this literature and of fsrs, oosterloo et al ( 2007, p94 ) states that there is little evidence of the impact of financial stability reports on financial sector soundness. bis central bankers ’ speeches operation would be undertaken without wider public sector involvement, since taxpayer funds are at stake. normal public sector accountability mechanisms ( annual or ex - post reporting, audit, select committee examination, etc ) operate in such a case. transparency of the bank ’ s financial stability activity is also limited by the requirement on us as a supervisor to maintain confidentiality of information that institutions provide to us7. this means that, generally speaking, we cannot reveal the nature of discussions or correspondence with a supervised entity, both to protect commercial confidentiality and to ensure entities feel safe in talking with us. the financial stability policy development process is more open and consultative than the operational, supervisory process. public engagement in prudential policy development is a cornerstone of our approach – we consult regularly with the public and financial sector on major policy innovations before finalising