markets. mere financial support to troubled sectors is no solution. competitiveness can be recovered only through a wide - ranging, consistent reform strategy involving the public sector, firms and the financial system. the commitment to creating a more business - friendly institutional and legal environment has to be strengthened, with further simplification of rules and regulations, improvement in the quality of essential public services, and continuing action to combat illegal behaviour. especially in today ’ s circumstances – marked by profound transformation – an easing of the fiscal burden on productive factors, together with selective spending cuts to reduce waste and measures to make government more efficient, can be decisive to the ability of the system to undertake the necessary changes. income support, retraining and job placement programmes for workers driven out of traditional forms of production are needed to protect those who will be disadvantaged in the short term. there is no lack of firms capable of taking up the challenge, growing large enough to compete in global markets, increasing the technological and innovative content of their products. a better balance in sources of finance, reducing dependency on bank loans and increasing the importance of equity capital, would help in providing enterprises with adequate resources. new forms of intermediation can facilitate the financing of firms by institutional investors. in other countries, banks ’ ability to stimulate and sustain innovation on the part of firms – including by offering high - value - added financial services – is one of the key drivers of economic growth. in italy as elsewhere, the financial system must regain public trust, which has been sapped by the excesses, occurring mostly in other countries, that led to a global crisis with enormous costs. it must demonstrate its ability to perform its function to the full. the negative perceptions of the conduct of banking and finance must not be allowed to trigger disproportionate reactions. public hostility must be overcome through decisive improvements to governance and through sound and prudent intermediation, ensuring that finance is not denied to those who deserve it and share the risk and that the financial system continues to support real economic activity. we are fully conscious of the difficulties that lie ahead. we are working to help remove them in the firm belief that sound finance remains essential to eliminate the liquidity constraints that cramp economic activity and prevent the fruitful exploitation of ideas and to promote growth by fostering innovation. bis central bankers ’ speeches

njuguna ndung ’ u : shariah - compliant banking and finance in kenya remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the launch of the first community bank ’ s mutual fund, nairobi, 6 march 2012. * * * ms. stella kilonzo, chief executive, capital markets authority ; mr. steve mainda, chairman, insurance regulatory authority ; mr. hassan varvani, chairman, first community bank ltd ; mr. abdullatif essajee, managing director, first community bank ltd ; mr. nathif adam, director, first community bank capital ; all the excellencies here present ; board members of first community bank ltd here present ; distinguished guests ; ladies and gentlemen : i am delighted to be with you this evening at the launch of first community bank ’ s shariahcompliant mutual fund and to celebrate the success of islamic finance. allow me at the outset to compliment the board and management of first community bank ltd for growing the bank from a start - up operation in april 2008, to an institution now boasting of deposits amounting to ksh. 7. 3 billion and assets of ksh. 8. 4 billion as at 31st january 2012. indeed, first community bank ltd pioneered the establishment of shariah - compliant banking in kenya and i am happy to note that the bank has continued to keep up the momentum by introducing a range of innovative shariah - compliant products. these products will go a long way in deepening kenya ’ s financial sector. we can now boast of having a full - fledged shariah - compliant financial infrastructure, thanks to the effort of nathif adam. ladies and gentlemen : kenya has not been left behind in the world - wide phenomenal growth of shariah - compliant finance and banking and huge gains have been made since its inception. today, we have two banks that exclusively offer shariah - compliant products and who collectively, command a market share of 1 % of the banking sector assets, in less than 4 years of operations. having noted the growing interest in shariah - compliant finance, some of the conventional banks have also created specific windows and divisions to enable them offer shariah - compliant products to their customers. i am encouraged to note that other institutions have now stepped in to offer shariahcompliant financial services beyond banking. takaful insurance of africa has been licensed by the