For the households, the financial system provides a means to optimally spread their income and consumption over their life cycle. Accumulating wealth via saving, investment and borrowing in the initial years, and de-accumulating of the wealth during the later years, such as through pension products and annuity schemes during retirement. This is particularly important as a population matures. The absence of these products will impose tremendous burdens to the government fiscal position and the overall standards of living. The Malaysian experience has been to encourage diversity of financial product offerings to ensure that the needs of all segments of the population are met. This includes, from having basic banking products at negligible cost for lower income groups, to the wider range of  BIS central bankers’ speeches  1  savings, investment and protection products for the middle income groups and for the higher income groups, wealth management and comprehensive advisory services. In the area of financing, a key priority for any country is financing to promote home ownership. This is to meet an important basic need of society and to encourage wealth accumulation among households. Malaysia approached this by initially establishing Cagamas, a national mortgage corporation, which enables banks to source long-term funding to match long-term housing loans. The national mortgage corporation has continued to evolve to promote the secondary market for housing loans via securitization and mitigating risks in mortgage financing through the provision of mortgage insurance.
several European countries). Social health insurance schemes based on earnings contributions is a means by which such funding sources can become a complementary source of funding to public sector. Such an institutional arrangement should provide high quality basic healthcare for the population whilst private health insurance can have a complementary role in providing higher level care for those that have the means to absorb these costs. In developing a financial sector that will deliver innovative financing for economic transformation throughout the different phases of development requires several supporting elements. These include: a. Having strong financial institutions that are resilient to withstand the economic cycle;  b. Establishment of a credit information system;  c.  Development of a domestic bond market for financing large investments for both the public and private sectors. This includes the necessary infrastructure to facilitate the functioning of the bond market;  d.  Having the talent pool in the financial services industry;  e.  Financial literacy has to be advanced aggressively;  f.  Effective structure to ensure sufficient supervisory oversight to ensure soundness and stability of the financial system;  BIS central bankers’ speeches  3  g.  Mechanism for resolution of debt problems including for public and private sector;  h.  Potential to leverage on technology. This in particular enhances distribution channel and outreach;  i. Consumer protection framework needs to be in place; and  j.  Surveillance mechanism needs to be in place.