contributed to a worldwide shift in preferences for risk - free assets, which may have been partly responsible for the build - up in financial imbalances prior to the financial crisis. uneven coverage pooling reserves would seem to be one obvious solution to these costs and inefficiencies. and indeed there have been moves in that direction at a regional level with the expansion of the chiang mai multilateralization initiative and more recently the brics contingent reserve arrangement. but pooling at a regional level is ineffective against shocks that affect the entire region and these regional mechanisms remain untested, with the exception of the european stability mechanism. regional arrangements are also complicated because of the difficulties of imposing reform conditions on a neighbour ( as the eurozone learned with greece ). moreover, many emerging market economies do not have access to regional financial arrangements at all [ chart 4 ]. so while regional insurance is a welcome layer of the safety net, it needs to operate in concert with a better global system including possible imf facilitation of lending. 5. the role of the imf if we are to continue to benefit from global financial integration then we need a system that can effectively and efficiently provide liquidity insurance to fundamentally sound sovereigns in order to contain spillovers to other parts of the globe. as with an independent central bank that houses supervision and liquidity provision under one roof, there are advantages to combining country surveillance and lending in one global institution, with an impartial and experienced staff. and risks are most efficiently pooled at a global level. this is the raison d ’ etre for the imf. bank of england staff estimates based on the spread between returns on reserve assets and those paid on domestic bonds. bis central bankers ’ speeches unfortunately, signs of fragmentation of the global financial safety net are obviously in part a reaction to the failure to implement the 2010 quota and governance reforms to bolster the imf ’ s resources and the representation of emerging market economies. the priority must be to implement those. but we also need to consider whether and how the temporary resources collected by the imf in the form of bilateral loans when it passed the hat around in 2012 could be put on a more permanent footing. one possibility is to extend these bilateral loans further. another possibility is for the imf to borrow directly from capital markets 9 during a systemic crisis which would create safe assets when demand for them is high, allowing funds to be recycled to those parts of the world with temporary liquidity needs.

##ul needs to be more apparent. as it currently stands, many view it as being no different from insurance. some even view it as being unnecessary. it is disheartening to learn that 51 % of respondents to a mta survey cited these very reasons on why they have little knowledge or interest in takaful products. the issue of misperception also remains, with many non - muslims deeming takaful as being only for muslims. opportunity to reposition takaful for the future this is the grim reality of the state of the industry, but it need not be so. in fact, i am positive about the prospects and potential of takaful. however, to get out of this “ predicament ”, we need an immediate and radical change. takaful must shed its image as being an imitator, a follower or impersonator of conventional insurance. takaful operators, including the financial groups to which they belong, must see beyond takaful as yet another line of insurance products. in this, we need the right leadership, shareholders included, to set the right tone from the senior leadership that takaful must offer distinctive benefits highly valued by all. its impact must be lasting and profound. this is especially so in our system, where takaful is competing side by side with the insurance industry. 1 / 6 bis central bankers'speeches all this considered, allow me to suggest three priorities for the industry to embark on to realise the full potential of takaful : first, fulfill the promise of takaful in helping protect people and businesses. takaful is derived from the arabic word “ kafal ”, which means ‘ to help ’. to my mind, this calls for the industry to reach out beyond its comfort zone of focusing on mandatory products, such as motor and fire, or those that are easy to sell, namely mortgage related products. it must make serious inroads in other areas where protection gaps exist, such as in agricultural risk, annuity and trade credit. something that is consistent with the needs of our economy. ultimately, the industry must be ahead of the curve to innovate and deliver solutions that are truly needed and highly valued by customers, both individuals and businesses. in family takaful, the industry must position itself as a trusted and valued solution provider for all malaysians. it must dispel the image of takaful as being an overly - complicated form of insurance suitable