rasheed mohammed al maraj : meeting the challenges of growth opening keynote plenary by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the 5th middle east insurance forum “ meeting the challenges of growth ”, manama, 8 february 2009. * * * your excellencies, ladies and gentlemen, good morning. it gives me a great pleasure to welcome you to bahrain for the 5th middle east insurance forum. this event is an opportunity for the insurance industry to meet and exchange views on current market and economic conditions that have a direct impact in our insurance markets. i would like to thank the organisers, sponsors and speakers for supporting this important gathering. this year ’ s theme for the forum – “ growth opportunities beyond the crisis ” – is a reminder that the financial landscape has changed dramatically since the last time this forum was held. the turning point in the global financial crisis is generally agreed to have been the bankruptcy of the investment bank lehman brothers in the middle of september last year. this turned a problem that had been seen as primarily affecting the developed markets into a worldwide phenomenon. previously the slowdown was expected to be limited to the developed markets while the emerging markets continued their recent strong growth. after lehman the slowdown began to affect all parts of the global economy. the crisis has been a stark reminder of how interconnected the world financial system and economy has become. financial sectors have also become more interconnected. while most comment has concentrated on the role that the lehman bankruptcy played in worsening the crisis, we should not forget that the events surrounding aig also had an impact on global financial markets. in other words, aig had become systemically important and had far reaching implications outside the insurance industry. at the central bank of bahrain, we believe that the recent experience of global financial crisis has reinforced that our top priority must remain our duty to ensure the protection of policyholders. we remain truly committed to foster the trust and confidence that insurers provide to their clients, particularly in times of need. from a regulatory perspective, the cbb has taken various steps to ensure that a stable insurance market continues to strive and prosper in our region. we are fortunate in bahrain to have had significant growth in the level of gross premiums over the last several years. in 2007, insurance premiums increased by more than 20 % and the interim reports received for 2008 appear to indicate a similar trend. we remain however vigilant and through ad hoc reporting

an advertising campaign on sepa. i encourage other communities to follow these examples. let me also be clear on one related point : banks should not try “ misusing ” sepa, and blaming sepa for any unpleasant changes. in that case, we could end up with a similar debate on perceived price increases as we did after the introduction of the euro. this would help nobody – neither the industry nor the customers. second, the industry should be clearer on the timetable for the “ dual circulation ” period of its instruments. the request for clarity on the end date also comes from end - user associations. interesting in this respect is the ecb ’ s recent study in cooperation with the banking industry analysing the economic impact of sepa. 2 the study confirms that two main forces will come to play. on the one hand, cross - border competition and new market participants could affect the revenue side of banks. on the other, automation and electronic processes will enable banks to achieve efficiency gains and cost reductions. the study concludes that the dual implementation phase of sepa should be as short as possible. as initial investments and higher adaptation costs are necessary in the short run, it is for the banks to decide how they will adapt to the new environment in the medium to long term. indeed, a shorter changeover to sepa will allow banks to focus more on their offering of innovative products in the medium to long term. one of the more active sepa communities, france, has already indicated an expected end date. this is a positive example, and other communities should follow. should, however, banks need more preparation when they move to the new sepa framework, the ecb and the european commission stand ready to consider supporting measures, including regulation, if required. let me now turn to the readiness of the industry for sepa card payments. i will briefly present some of the ecb ’ s views on cards. later today the panel will provide their views on the new cards landscape in sepa and i am looking forward to an interesting discussion. readiness of sepa card payments? card payments are closely monitored by the eurosystem because they are now the most popular non - cash payment instrument in the euro area. according to our blue book statistics, more than 15 billion card payments were made in the euro area in 2006. 3 between 2000 and 2006, we also noticed that the use of cards increased more quickly than the use of other instruments. the use of cards increased at an impressive rate of