Budget cuts will only lead to lower growth, higher unemployment and larger deficits. I see no contradiction between fiscal consolidation and sustainable growth. In fact, the one is a pre-condition for the other. I do not deny that there are negative demand effects in the short-term. But for the longer-term, sound fiscal policies are essential to lower borrowing costs and encourage investment. Moreover, in those countries experiencing severe sovereign debt tensions, fiscal consolidation is unavoidable to maintain market access. That said, there is clearly a need to take measures to strengthen the growth potential of the euro area’s economies. These measures also need to have effect in the short-term so as to soften the short-term impact of fiscal consolidation. Recognising this, the European Council on 28–29 June agreed on a “Compact for Growth and Jobs”. This Compact aims to free up to 120 billion euro for growth and investment, representing roughly 1% of euro area GDP. This comprises a 60 billion euro increase in the lending capacity of the European Investment Bank; 55 billion through the reallocation of structural funds to growth-enhancing measures; and 4.5 billion of investment financing through a “project bond” pilot phase. On top of that, the European Council took a number of measures to improve the functioning of the Single Market and facilitate adjustment within monetary union. The single market in services will be completed, which is expected to yield economic gains of up to 330 billion euro.
Undoubtedly, it must compete and present a viable alternative to the conventional insurance. At the same time, it has a unique value proposition that can meet the Muslim demand and Shariah requirements. The sustained demand for takaful, especially among Muslims, has contributed towards the industry’s steady growth – from 3% market share a decade ago to almost 18% in 2018. The growth potential for takaful industry remains clear and promising. In 2018, almost half (45.8%) of the Malaysian population have yet to obtain protection. Based on a recent demand survey, 46% of Malaysian households and 48% of businesses responded that they are unaware about the comprehensive range of solutions that the takaful industry is able to offer. To reduce this gap, as an industry, takaful operators must collectively elevate the prominence of takaful and its capabilities to be a solution of choice for Malaysians. I wish to suggest three pathways for this aspiration to be realised: First, by offering good value solutions to customers; Second, by adopting innovative tools and effective distribution strategy; Third, by inculcating sound understanding of financial protection and prudent financial behaviours among Malaysians. Allow me to elaborate on these . Firstly, the takaful industry has the advantage of a business model that is grounded on the values of mutual assistance and solidarity. Unlike insurance, which is premised on the buying-and-selling of risks at a premium, takaful advocates 2/5  BIS central bankers' speeches  for value propositions that consumers are likely to find unique and take comfort in.