##verging signals to those that use them. they thus encourage the mimetic behaviour that i discussed previously. the fact that some market participants are more sophisticated than the average is a guarantee that standardisation will remain limited, since they will develop techniques that are little used by others. in this respect, i must stress that the basle committee, as illustrated by the new capital accord, is encouraging banks to use more sophisticated and accurate risk measurements techniques. in addition, supervisors might help – and obviously they are already helping - to spread the idea that financial institutions should round out their current range of risk management tools to include extensive use of stress testing. this technique offers a better reflection of the varying situations of institutions and of the diverse perceptions that institutions have of exceptional events. the application of stress testing techniques and their results are thus inherently more diversified than those resulting from methods based on the value - at - risk approach. these are only examples of options to help improve the functioning of markets. there is probably some merit in an overall review of regulatory, accounting and tax rules and regulations, as well as of codes of good conduct and good practices, and of structural developments of market themselves, to identify possible amendments and improvements that could help protect and enhance the behavioural and conceptual diversity of modern financial markets. in conclusion, let me stress the important role played by central banks in preserving monetary and financial stability in an increasingly globalised world. the recent years have shown the benefits of monetary stability in terms of growth in a globalised world. it is of course closely linked to central bank ’ s independence, which is no longer a matter of debate. financial authorities are nevertheless faced with a new challenge, which is to strengthen financial stability in a context of amplified financial cycles. i would like to stress what i feel is the highly complementary nature of price stability and financial stability objectives : price stability is the bedrock on which financial stability is built. central banks have a undoubtedly special responsibility due to their position at the heart of financial systems : · they contribute directly to supplying liquidity to the economy, · their close and constant contact with credit institutions gives them a thorough understanding of banking systems, · they contribute to banking supervision, · last but not least, central banks are responsible for a safe and efficient functioning of payment systems and, at least for some of them, of securities clearing and settlement systems. i thank you for your attention.

rasheed mohammed al maraj : global regulation and offshore centres – onshore vs offshore address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the gcc private banking conference, manama, 7 march 2012. * * * your excellencies, distinguished guests, ladies and gentlemen : it is a great pleasure and a privilege to be addressing this conference. over the course of the day speakers and delegates will debate and reflect upon many aspects of the private banking environment, and i have no doubt that the initiatives which will be identified here will provide interesting and useful ideas. my speech today will concentrate on the importance of regulation to the financial industry in general, and the private banking environment in particular. i shall explore what the cbb has done, explain why that has been beneficial to our stakeholders, and provide an insight into our priorities in the coming period. the cbb has a proud regulatory history. our framework has been moulded over many years, and it has served our stakeholders well in times of local, regional, and international turbulence. it provides clear leadership and direction to licensees, and it is designed to provide investors with a detailed understanding of the way in which the cbb expects banks and financial institutions to discharge their responsibilities. this is due, at least in part, to our philosophy of “ constant improvement ”. as such a great deal of our work is pro - active, and all of our work is designed to mitigate risk in a controlled manner whilst accepting that risk is an inherent ingredient in the financial industry. we consult with practitioners and the various other stakeholders in the financial sector to understand their needs and desires, and we strive to be responsive to those needs. a fundamental premise of our approach is that we make considerable efforts to ensure that our licensees understand the importance of, and implement and comply with, recognized international best practice in their field. but not everything is local. global capital flows are critical for bahrain. we are a small nation ; we have an open economy and we do not impose complex capital controls. we welcome ethical investment from any source, and we recognize that inward capital flows benefit the wider economy. in keeping with those goals, the cbb has introduced a number of improvements to our regulations during the recent past, many of which have had an impact on the wealth management industry, either directly or indirectly. for example the role of corporate governance has been enhanced, and the cbb was a key player in the