You may copy it, give it away or re-use it under the terms of the Project Gutenberg License included with this eBook or online at www.gutenberg.org. BIS Review 15/2010  1  First, after the Asian crisis and the ensuing capital flight from the region in the 1990s, a number of emerging market economies in Asia sought to build up larger currency reserves. Following the earlier pattern of Japan and South Korea, emerging market economies pursued a policy of export-driven growth based on a low cost level and a stable exchange rate. Combined with the US market’s willingness and capacity to import and consume, this led to substantial balance of payments imbalances. And global capital markets failed to channel surplus savings in emerging market economies into investment in wealthier countries. Over the past year, falling demand for goods and services in western economies has reduced US imports and Asian exports. However, unless Asian countries change course, these imbalances may quickly reemerge as the US gradually manages to boost growth in its economy. Second, a number of countries are approaching or experiencing a sovereign financial crisis. In addition to the cost of rescuing banking systems, tax revenues have decreased and social welfare expenditure has increased. Large deficits are resulting in elevated government debt levels, with rising interest payments adding to the deficits. Sovereign creditworthiness is deteriorating and higher credit risk premiums are exacerbating the situation.

Worldwide, insurers have been successfully leveraging on bancassurance to gain a foothold in markets with low insurance penetration and a limited variety of distribution channels. Bancassurance can increase market penetration given the relatively higher level of public confidence in dealings with banks. For the banks and insurers, capitalising on synergies derived from tapping into the banks' extensive customer base to offer consumers comprehensive financial solutions while optimising on the branch network have proven to be highly successful strategies towards mutually improving productivity and profitability. In Malaysia, bancassurance constitutes a significant feature of Malaysia's financial landscape, and continues to develop rapidly in terms of market reach and operational sophistication. These developments have contributed towards significantly raising the nation's insurance penetration level and enhancing the competitive structure of the insurance industry. In addition to bancassurance, the Internet is emerging as a promising medium for insurers to advertise products and service policyholders. With the rapid technological advancements and increasing consumer demands for more efficient delivery of products and services, it offers the potential for insurers to target a wider market, improve client service and conduct business seamlessly across borders. While planning for effective distribution channels may become the key differentiating factor in the growing region today, one must not overlook the implications of the changing demands of the general public. The ageing of the population is an issue of increasing importance in the developing world. All across Asia , the number of people aged 65 and above is expected to grow dramatically over the next 50 years.