' s first financial crisis. stockholms banco was taken over by the riksdag ( swedish parliament ) and later became the riksbank. it must be said that the banknotes were very popular and highly - valued as long as people trusted in their worth. compared with coins, they weighed very little and could easily be carried around. they were also considered to be worth more than the corresponding amount in coins. it was not until 1904 that the riksbank was given a monopoly on issuing banknotes. prior to this some commercial banks issued their own banknotes. the banknote monopoly meant two things. firstly, it resolved the trust problem. unlike commercial banks, a central bank like the riksbank cannot normally go bankrupt. the holder of a banknote issued by the riksbank can always be certain that it has a worth corresponding to its nominal value. secondly, the banknote monopoly established a unique payment standard that is set by the state ; in sweden the legal tender is banknotes and coins issued by the riksbank. the use of having a uniform standard for payments, and having this standard accepted by all, saves time and energy for individuals to expend on other things. there is, of course, a reason why i am standing here talking about historical events. but, before i get to this reason, i would like to say a few words about the money we use today. central bank money and commercial bank money today, we have three kinds of money. the first kind is the one i have talked about the most today, banknotes and coins. these are a form of central bank money, that is, money issued by the central bank. as i mentioned earlier, the special thing about central bank money is that it has no nominal credit risk, as it stands for a claim on the central bank, which cannot go bankrupt. cash is also the form of central bank money that can be held by the general public. the second sort of money is also central bank 3 money, but in electronic form. this is the money that is held in accounts with the riksbank and it can only be held by those who are allowed to have accounts in the riksbank, which currently means credit institutions, securities companies, clearing organisations and the swedish national debt office. it is electronic central bank money that the banks use when they are making large payments to one another. this is done through a payment system called rix. most of the electronic payments made in

practices. standards focusing on capital adequacy and solvency and key areas of corporate governance are now an integral part of the insurance regulatory framework in place for all insurance firms and brokers operating in the kingdom. the establishment of international standards and their implementation has bolstered bahrain ’ s reputation as a regional centre where sound practices prevail. this has encouraged many insurance and reinsurance firms to choose bahrain as a base. the central bank of bahrain has also put in place a framework allowing for the establishment of captive insurance firms. this initiative by the cbb is the first of its kind in the middle east region, aiming to fulfill the insurance needs of major industrial, oil, and service firms that seek to establish their own insurance companies. bahrain succeeded in 2006 in attracting tabreed company as the first captive insurance company, licensed in the gcc. the lack of a specialised centre in the region aimed at fostering the development of the captives market led to the cbb ’ s initiative in this regard. furthermore, bahrain has also attracted takaful and retakaful insurance businesses, who are benefiting from the well structured regulatory environment. the cbb benefited from its successful experience in the field of islamic banking, supporting the successful implementation of sound regulatory framework for takaful businesses. there are several common areas shared by takaful and islamic banking. in addition, the cbb identified the need by islamic banks to transact with takaful firms to meet their insurance requirements. bahrain is a founder and an active member in many of the islamic financial standards committees. these committees are a reflection of the market realities and the need for change in an evolving industry. there is a strong demand by clients for takaful products, at a time when firms rendering such services in the arab market are still relatively few. ladies and gentlemen, the theme of today ’ s conference is of special significance considering the global challenges faced by the arab insurance markets to integrate, and work towards consistency in legislations. it also lays the foundations for insurance companies to enter new markets and stimulate integration to pave the way towards one arab insurance market that is capable of competing globally. i am grateful to bahrain ’ s insurance community for its substantial contributions and sincere efforts, and again wish to thank the organizers and participants in this important conference wishing you all successful and fruitful deliberations to further contribute in developing the integration of the arab insurance industry.