based regime, it is important that there remains a sufficient degree of regulatory oversight to maintain financial stability and public confidence. it is equally important for the regulations to focus on facilitating market - led adjustments that will allow the industry to evolve in response to market developments. this includes putting in place mechanisms that harness market forces and discipline, to reinforce prudential regulation whilst also promoting a more efficient and responsive financial system. as we prepare ourselves for the challenges arising from greater integration and increased competition, there will be regular review and re - assessment of the regulatory framework as we benchmark our regulations against leading business practices and international standards set by recognized bodies such as the iais and the international accounting standards board. rapid developments in technology and information systems coupled with the forces of globalization have made the world increasingly borderless. while such developments are welcome as they provide a platform to hasten the pace and manner through which businesses and financial transactions can be efficiently concluded, they can also facilitate money launderers and terrorist financiers to conduct a range of illegal activities, thus destabilizing a country's financial system and damaging its image and reputation. as structured programs on anti - money laundering and counter financing of terrorism activities are relatively new especially among many developing member countries, it remains a challenge for the financial industry and regulators alike to formulate adequate measures and mechanisms to counter these perpetrators. in this regard, compliance with the standards set by the financial action task force on money laundering help deter the asia pacific region from being targeted as a regional centre for money laundering and terrorism financing. in this regard, i am especially pleased to share with you that malaysia has been ranked among the top 10 countries in terms of aml / cft compliance in the recent mutual evaluation report 2007 assessment exercise. let me now turn to a subject close to us here in malaysia, that is, islamic insurance or better known as takaful. in recent years, takaful has grown significantly as the islamic alternative to conventional insurance and has evolved from being a domestic operations to becoming a thriving global business. the global takaful market is expected to grow between 15 and 20 per cent per annum. nevertheless, the market penetration level remains low, notably less than 5 % in many muslim countries and 6. 8 % here in malaysia, thus providing significant market potential that remains untapped. bank negara malaysia will continue to foster the continued growth of takaful business by providing a conducive business and regulatory environment. however, there

banks such as venture capital and private equity firms, as well as alternative financiers such as factoring and leasing companies, have an equal stake in this and should also play a more active role in financing the needs of businesses. the need to bridge the gaps between 20th century finance and the 21st century economy is both compelling and urgent for the whole financial sector as conditions remain challenging for the economy domestically and abroad. this is also certainly not the only time that we will face such challenges. to be safe, finance must not sow the seeds of its own destruction and not serve as an amplifier of risk to the economy. the ability of finance to mobilise capital, create leverage and distribute risk allows it to be a powerful force for good. but excessive and unbridled risk taking creates instability which is harmful not only for the particular firm, but the economy and society at large. there is also a greater need for finance to be socially responsible. financial institutions can and must assert the much needed leadership in a world where the continued neglect of equitable development and a rapidly deteriorating environment is displacing communities, raising social and political tensions, and putting future generations at grave risk. finance still holds the trust of society and substantial influence over economic agents. but this is a privilege earned, and demands that financial institutions behave ethically, and act in the best interest of the communities they serve. the role of technology to revolutionise finance there is no question that technology will lie at the very heart of these imperatives for the financial system. this has been true for decades, only the order of its impact is now, arguably much greater. after all, the world ’ s first atm in 1967 transformed the relationship between people and money and making finance more accessible. today, fintech signals the next phase in the transformation of finance. fintech holds enormous potential to enhance competition, increase productivity, address unfulfilled consumer demand and fundamentally change the way institutions provide financial 2 / 5 bis central bankers'speeches services – in ways we may not even have fully discovered. similarly for islamic finance, adoption of technology could present significant opportunities to reduce the cost of financial intermediation and expand access. for example, distributed ledger technology could enable automated execution of contracts through the use of digital protocols, or smart contracts, which can simplify complex shariah contractual processes. in addition, fintech initiatives to integrate social finance tools, such as waqf, sadakah and zakat, to offer