rasheed mohammed al maraj : leveraging technology through turbulent times address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the meftec 2009, manama, 10 february 2009. * * * good morning ladies and gentlemen : i am pleased to welcome you to bahrain for the 2009 middle east financial technology exhibition and conference, or meftec as it is popularly called. this morning, as i look around, i am happy to see that this event continues to arouse so much interest. each year the number of participants continues to grow, a clear testament to the success of this exhibition and conference. i would like to thank the organisers for their efforts in enhancing and improving each event, and the delegates for their participation. i wish you a pleasant stay here. information technology is, of course, at the heart of the modern financial services industry. banks have used advances in information technology to improve their service to clients and to improve the ways in which they manage their risks. the delivery of financial services has been fundamentally transformed by technological innovations such as mobile phone banking, internet banking and the ability to trade stocks and bonds from a home computer. for many millions of people around the world these technological innovations have improved the speed, availability, and cost of financial services. technological advances have also contributed to financial innovation. had it not been for technological innovation, and particularly increases in computing power, the kinds of products which enable a business to manage its interest rate, foreign exchange rate, and funding risks could never have been developed. these products are now so commonplace that we tend to take them for granted. we forget just how important they have become to well - managed businesses. the theme of this year ’ s conference is “ leveraging technology through turbulent times. ” these are, without a doubt, turbulent times. the world is confronting its most serious financial crisis in several generations. the current global financial crisis has certainly been a reminder that not all financial innovation is a good thing. some of the new financial instruments that have been created in the past decade have imposed large costs, not just on those who own them, but also on the wider society. it is clear that we, the regulators, will need to become much more cautious about financial innovation than we tended to be in the years before the crisis. at the same time, however, we should remember the benefits that innovation has also managed to deliver. so, looking to the future, we can be

these technologies are available to all, the intensity of their application and the accompanying elevation in the growth of productivity are more clearly evident in the united states and other countries with fewer impediments to implementation. parenthetically and counterintuitively, the increased ease of layoffs in the united states, by reducing the risks of hiring by american employers, has contributed to a higher rate of employment in the united states compared with the vast majority of our major trading partners. a particular irony in all this is that europeans have been finding investments in the united states increasingly attractive and have accounted for an increasing share of the expanding total of foreign investment in u. s. direct and portfolio assets. in an effort to raise returns on domestic assets, many governments, european and others, are being led away from former dirigiste regimes to place greater reliance on markets. these governments see such a direction as necessary in order to enable their firms and workers to achieve the efficiencies required to meet the rigors of international competition. recent plans for tax reforms, significant initiatives to create more flexible labor markets, and ongoing steps toward greater privatization in europe and elsewhere underscore the extent to which views have changed in recent years. but it is clearly pragmatism, not ideology, that is the main driving force in these evolving views. the structural policy adjustments in western europe and japan, not to mention the efforts in china and russia to move toward market capitalism, are being motivated, for the most part, by the evident ability of market competition to elevate living standards. thus, despite the meaningfully different views initially held of the way the world does, and should, work, powerful global competitive forces appear for now to be driving the economic and legal paradigms of many nations into closer alignment around a more competitive market capitalism. it is by no means self - evident, however, that these trends will eventually lead to world convergence of economic regimes and to agreement about the conceptual framework that such a convergence would likely require. certainly, the demonstrated ability of relatively unfettered markets to raise living standards over time creates considerable incentive for movement in that direction. but the speed of that movement - indeed, its very persistence over time - is far less clear. even among liberal democracies, one can still find deep - seated antipathy toward free - market competition and its partner, creative destruction, to use joseph schumpeter ’ s now famous insight. while recognizing the efficacy of capitalism to produce wealth,