These projects relate to building the capacity and enhancing the efficiency of financial institutions as well as the development of consumer education and protection. Policy measures for the insurance industry in 2002 will continue to focus on promoting incentives for improved performance, encouraging the adoption of best practices and strengthening consumer protection. Towards this end, 10 recommendations under the FSMP involving 13 projects are targeted to be fully implemented in 2002. The recommendations include the introduction of independent financial advisers (IFAs) and the adoption of 'best advice' practices in the sale of life insurance products that will enable Malaysian consumers to obtain professional independent advice on their financial options. Given the right strategic focus, there is tremendous potential for future growth in the life insurance sector, particularly in products and services that provide for retirement needs, capital accumulation and long-term care. Given the right strategic focus, there is tremendous potential for future growth in the life insurance sector, particularly in products and services that provide for retirement needs, capital accumulation and long-term care. To achieve sustainable growth, there is a need for insurers to intensify research and development efforts to provide consumers with a broader range of innovative and competitively-priced products. Furthermore, there is a need to establish and continuously strengthen minimum underwriting standards and controls, particularly in new lines of business. This is to ensure that business is underwritten on sound and prudent insurance principles.

The experience has shown that periods during which many of the countries in the region had experienced significant declines in their exchange rates, it was difficult to find clear evidence of a relationship between the degree of depreciation of the exchange rate and the growth in exports. The exchange rate has not been a dominant influence in determining export performance. More important, it is the overall competitiveness of the economy that will ensure sustained export performance. Current conditions favour monetary policy in 2002 to remain accommodative, reinforcing the continuing counter-cyclical policies. Monetary policy will build on the gains from the cumulative monetary easing initiated since 1998, to ensure that the economic recovery process becomes well entrenched. Emphasis will be placed on creating an environment of stability and predictability to  4  BIS Review 21/2002  facilitate investment decisions. With low inflation and stronger economic fundamentals, Malaysia has the ability to exercise greater policy flexibility to preserve longer-term sustainability and stability. In strengthening the resilience and competitive position of banking institutions, BNM will continue to further strengthen the regulatory and supervisory framework. The objective is to provide a conducive environment for banking institutions to be more efficient through innovation and competition amongst players in the financial market. The challenge is to manage the trade-offs between encouraging innovation in the financial system and preserving overall financial stability. Towards this end, a total of 14 recommendations under the FSMP, involving 36 projects, are targeted to be fully implemented in 2002.