zeti akhtar aziz : challenges of financial education in malaysia opening remarks by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of the insurance consumer education programme, kuala - lumpur, 29 august 2003. * * * saya berasa amat berbesar hati mengalu - alukan kehadiran tuan - tuan dan puan - puan ke majlis pelancaran program pendidikan pengguna bagi industri insurans dan takaful pada pagi ini. pelancaran program ini merupakan satu lagi perkembangan penting dalam pembangunan industri insurans dan takaful. ladies and gentlemen, the economic and financial landscape in malaysia has undergone significant transformation. in the process, the economy has become more diversified with new sources of growth. in tandem with these changes, we have seen the modernisation of the financial sector that has also become increasingly more diversified to meet the new requirements of the economy. there has also emerged new distribution channels and channel convergence within the financial sector. the financial sector has also increasingly leveraged on advances in technology which has significantly changed the way financial business is being conducted. as market advances continue to expand the range of financial products and services, consumers are being faced with increasingly complex choices and options in the management of their personal finances and exposure to risk. in this more complex financial landscape, it becomes important for consumers to have improved access to information. financial education for malaysian consumers is central to this process. it is therefore a matter that is accorded high priority by the central bank. it therefore gives me great pleasure today to launch the consumer education programme for the insurance and takaful industries. this represents an important step in the ongoing evolution of the development of our financial system. indeed, this also represents a part of the overall efforts to promote market integrity and consumer protection over the whole spectrum of banking, insurance and takaful activities in the market. for consumers to fully realise the benefits of increased opportunities available in this continuously changing financial environment, consumers need to be in a position to actively manage their financial assets while at the same time safeguard their financial future. the public response to the launch of the consumer education programme for the banking sector early this year has been most encouraging. to date, more than two million visitors have accessed the bank negara malaysia ’ s

they have also been affected to different degrees by the decline in world trade. the countries that have quickly taken concrete measures will probably come out of the recession first. this indicates that the recovery will not be synchronised. in sweden we are now assuming that gdp will fall almost as much as during the crisis in the 1990s. at that time the crisis was domestically - generated with financial imbalances, high nominal interest rates and an overvalued currency. on this occasion much of the disruption comes from outside. public finances are in a good condition to begin with, interest rates are low and we will probably continue to have a current account surplus. at the same time, exports are declining rapidly, which has negative repercussions on investment. household consumption is subdued by the deterioration in the labour market and an increase in precautionary saving. the outcomes and confidence indicators in recent months emphasise the weak developments. the recession is assessed to be unusually deep, which affects the supply of credit. although corporate borrowing is still increasing, loan terms for companies have been tightened. there are also signs that there has been some substitution from market borrowing to bank borrowing. it is the larger companies that are experiencing the biggest problems with funding in the market and taking up a rising share of bank loans, which contributes to smaller companies seeing themselves at a disadvantage. there are now clear risks that increased credit losses will subdue the banks ’ lending to companies. there is also a risk that small and medium - sized companies will be pushed aside. funding difficulties and weak international demand have led to companies revising down their investment plans. all in all, this points to the swedish economy being weaker than was expected in february. it means that resource utilisation will be lower than normal during 2009 - 2011. this entails a risk that inflation could be lower than the monetary policy target. in addition, inflation expectations have fallen and are slightly below 2 per cent two years ahead. the repo rate and the repo rate path need to be lower to counteract the weak resource utilisation and inflationary pressures. this is why the repo rate was cut to 0. 5 per cent and the riksbank considers there is some probability of a further cut in the future. the future repo rate path has also been lowered and the interest rate forecast now points to a very low repo rate during a relatively long period of time. the repo rate is expected to remain at a low level until the