Takaful operators have started publishing and 3/6  BIS central bankers' speeches  implementing new customer service charters. The industry must now walk the talk. In the next few months, a Customer Satisfaction Index Survey will be carried out to measure actual service levels against what operators promise. The results will be made public. Customers can shop around and make better informed choices when deciding who to trust to protect them. In this digital age, technology has changed the way we live, the way we save, and the way we bank. But it seems that little has changed in the takaful and insurance space. This perplexes me. This is quite telling from the industry’s attitude towards efficiency and innovation more generally. Mobile and internet penetration in Malaysia stand at about 132% and 81% respectively. There is potential to increase the offering of supplementary services online, such as vehicle anti-theft services and health advice, as a recent study by Bain & Company on insurance customers in 19 countries confirms. The industry can invest in its own capacity to deploy new technological solutions itself, or it can partner with others. The point is that it has to respond proactively, or risk being disrupted by others. Just a few weeks ago, Amazon, Berkshire Hathaway and JPMorgan announced a new venture to disrupt health insurance in the U.S. This is the reality that the industry has to face. Another issue that the industry is lagging behind is in terms of migration to e-payments. The use of cheques is still prevalent.
Yet the most notable thing is that, despite these difficulties, we have succeeded in keeping the Libor around the middle of the target band. This is, after all, what counts for the implementation of monetary policy. So neither the current criticisms levelled at the Libor nor the actual movements in the Libor are an immediate reason to dispense with this rate as the operational target of the SNB. Conclusion Let me briefly conclude. Despite clear signs of a return to calm, the money market has not yet gone back to “business as usual”. The Libor/TOIS differentials continue to indicate a certain degree of tension. The various waves of turbulence also show how difficult it is to predict what will happen next. Central bank actions have helped to defuse the situation. Nevertheless, they can only treat the symptoms of the malaise, or fever. An effective cure and the restoration of confidence between market participants are primarily a matter for the banks themselves. The SNB’s tools – its medicine cabinet – have so far proved their worth during the turbulence. Yet the crisis provides a reason to review and where necessary adapt them. For central banks, it is important to consider, not just the immediate effect of an instrument, but also the longer-term repercussions. Thanks to their monopoly in issuing currency, central banks can engage in almost unlimited short-term intervention when markets and market participants are threatened with collapse. However, such extreme measures carry high risks for the longer term.