rasheed mohammed al maraj : gulf executive development programme speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the gulf executive development programme graduation ceremony, manama, 30 april 2007. * * * members of the steering committee, distinguished guests, programme graduates, ladies and gentlemen : good evening. it gives me great pleasure to welcome you all here this evening, and to publicly acknowledge both my own support and that of the central bank of bahrain for the gulf executive development programme. this graduation marks the 9th such programme to have been completed – its continued popularity, in my view, clearly shows the inherent strengths of its offering, and the commitment of all its sponsoring organizations. let me begin, however, by first acknowledging the success of tonight ’ s graduates. all study programmes which have to be combined with full time employment represent unique challenges, in terms of time - management and commitment. these challenges are all the more acute when the programme is at an advanced level, such as the gedp. congratulations, therefore, are richly deserved for all of you graduating tonight, for your hard work and perseverance. of course, armed with your new qualification, even more will be expected of you. but i am confident that, having successfully completed this challenge, you will move on to even greater professional success in the years to come. i am sure that after your studies, you appreciate that true education isn ’ t so much about knowing all the answers, but knowing what questions to ask ; and that true leadership requires the exercise of responsibility, not just of authority. remember also that success is measured as much in how we achieve something, as in what we achieve. of course, many others have also been involved in making gedp 9 a success this year, and i should also like to acknowledge them publicly. in particular, the sponsoring employers, faculty members, and business leaders, who have so graciously given their time, have all contributed enormously to this programme. i would like in particular to thank, as always, the faculty of the darden graduate school of business administration at the university of virginia, the members of the gedp 9 steering committee, and khalil nooruddin of the bibf and all his staff. let me finish by wishing this programme continued long - term success. our economy needs an educated workforce in order to develop, and in turn the current high growth and continued expansion of our economy translates into a strong need for

and volatile inflation environment. the financial crisis and its aftermath have brought mortgage contract design back into sharp focus. in my remarks today i will focus on one aspect of mortgage design ; namely how the prevalence of adjustable rate mortgages, or arms, may affect a number of aspects of economic performance, including the pass - through of monetary policy, the sharing of interest rate risk, and the use of resources spent on refinancing. the federal funds rate dropped from 5 - 1 / 4 percent in august 2007 to the current 0 – 25 basis point range starting in december 2008. longer - term interest rates such as the yield on 10 - year treasury bonds also declined significantly, from about 5 percent in mid - 2007 to a range between 2 – 3 percent in recent years. as illustrated in the chart, however, the average see the federal reserve bank of new york quarterly report on household debt and credit. see new mortgage designs for an inflationary environment for the agenda and proceedings. bis central bankers ’ speeches interest rate paid on the total stock of outstanding mortgages in the u. s. decreased relatively slowly and by a smaller amount over this period. the source of the stickiness in mortgage interest rates is that the vast majority of outstanding mortgages in the u. s. are long - term fixed - rate mortgages, whose pricing is tied to long - term interest rates, and which require borrowers to refinance to benefit from a decrease in market rates. this refinancing process in earlier episodes has worked quite smoothly in transmitting lower market interest rates to the mortgage market – in particular during the large refinancing wave in 2002 – 2003. but during the crisis, many borrowers were unable to refinance either because their property was worth less than the outstanding mortgage balance, or because they didn ’ t otherwise fulfill underwriting criteria that had also become much more stringent than during the boom. these features surely limited the transmission of accommodative monetary policy through households ’ balance sheets. furthermore, borrowers that were able to refinance and benefit from lower interest rates were mostly those with high credit scores and relatively lower debt balances. the administration responded to this limited pass - through by introducing programs such as the home affordable refinance program, or harp, to enable refinancing for borrowers with high - ltv loans backed by fannie mae or freddie mac, or facilitating streamline refinances of fha loans. while these programs eventually