portfolio in these sectors. bis central bankers ’ speeches islamic capital markets, mutual funds and takaful industry are also very important components of the islamic financial system and need to be nurtured and developed along with islamic banking. we are working closely with the securities and exchange commission of pakistan ( secp ), regulator of capital markets to help develop these non - bank financial institutions. we appreciate and acknowledge the important steps taken by secp, including review of mudaraba guidelines, issuance of sukuk guidelines, establishment of central shariah advisory board etc, and believe that these are likely to help in development of the overall islamic finance industry. lastly, i would like to emphasize the critical importance of investment in research and development particularly for the evolving sectors of islamic finance. unfortunately we are not making adequate investment in this area, which is limiting our capacity to develop shariah based solutions for various business and economic needs of the real economy. the research and development is also needed to develop solutions for bringing monetary and fiscal policies and practices in conformity with shariah principles. the strategic plan for the next five years has envisages a number of such initiatives and i hope that the collaborative efforts by the regulator and practitioners would be instrumental in improving investment in r & d and developing better solutions for serving the financing needs of the real economy. in conclusion, i thank all the speakers and participants for coming here and hope that the deliberations and discussions during the road show will help the industry in moving towards more inclusive growth and equitable distribution of gains in the economy. bis central bankers ’ speeches

to be limited so as to make the rules of the game clear for global investors. the council approach gives the resolution authority powers to discretionarily exclude any type of liability for reasons of impossibility within a certain time frame, or to avoid wide - spread contagion. in our view, there would have been a benefit in defining ex ante the categories of liabilities that could have been excluded. this means that investors will lack certainty about how the new framework will be used, and in my view it may slow down the process of reducing financial fragmentation. for instance, there will inevitably be a political economy dimension to how national resolution authorities decide to exercise their discretion, with creditor classes that have particular importance in different national contexts likely to be favoured. this will affect the level - playing field between member states. moreover, the brrd foresees that after 8 % of a bank ’ s liabilities have been bailed - in, the national resolution authority has the option to use its resolution fund to bail - out a further 5 % of the bank ’ s liabilities. however, some countries will have larger resolution funds than others, for instance if they have more banks paying into the fund. this means that these bis central bankers ’ speeches countries would be able to bail - out more domestic banks before they exhaust the fund than those with less resolution resources available, who would need to use more bail - in. this will also not help reduce fragmentation. the single resolution mechanism ( srm ) – comprising of a european resolution authority and a single resolution fund – could remedy both these fragmentation problems of the brrd, which is a further reason why it is so essential. first, a central authority would not be influenced by national preferences when applying discretion. second, a single resolution fund, financed by levies on the whole banking sector and with a european backstop, would be effectively de - linked from national budgets. however, these benefits will of course only apply to countries that join the ssm and srm. moreover, it is essential that the european resolution authority will be in a position to act swiftly – if needed over a weekend for example – in order to avoid uncertainty about its course of action with a specific bank. as you know, we await the release of the com - mission ’ s proposal on the srm which is expected tomorrow, and i expect it goes in this direction. as to its institutional structure, the first - best option would be to entrust a newly established