It most clearly represents an explicit commitment by the central bank to the objective of price stability. In the United Kingdom, that commitment is in the form of a target for inflation that is defined as 2% a year, as measured by the consumer price index. In the medium term, a central bank can affect only monetary values – the price level. It cannot change the amount of goods and services an economy is able to produce. Over time, there is no trade off between inflation and output, as recent UK history illustrates. Between 1950 and 1997, UK inflation averaged nearly 6%. In contrast, since 1997, inflation has been close to target and much more stable, but annual output growth has averaged a little above its post-World War II average of 2.5%. In the medium term, low and stable inflation does not imply lower output. Moreover, even in the short term, meeting an inflation target is in many cases fully consistent with maintaining steady growth of activity. If demand falls below the supply capacity of the economy, inflation will tend to fall. If demand rises too quickly, putting pressure on capacity, inflation will tend to rise. Inflation-targeting central banks can, however, face an apparent dilemma when inflation moves away from the target not as the result of fluctuations in demand, but in response to commodity price changes. Following increases in gas and electricity bills, consumer price inflation in the UK has risen.
For takaful operators, staying competitive in a digital world will require far more than just direct sales channel or automated processes. It requires a rethinking of the fundamentals and principles of takaful, for which digital technology can be a catalyst. Takaful operators must rethink their sources of revenue, operational efficiency and talent strategy to reap the opportunities of digital disruptions. It is also important to rethink the business model and the role that takaful operators can play in a digital ecosystem that has transcended geographical boundaries. Digital disruptors such as virtual or peer-to-peer takaful provider that is tech-enabled might be able to overcome many pain points experienced by the industry in more efficient ways. The buzz right now in the financial industry is around digital banks. Nonetheless, this can swiftly turn to digital insurers or takaful operators. Such development could be the next phase that could further enhance the 3/5  BIS central bankers' speeches  quality and pricing of services delivered, while also penetrating new areas for the industry to achieve our protection goals. This development could provide the impetus for exponential growth in insurance and takaful penetration in the country. Thirdly, the industry must take greater responsibility to educate consumers and inculcate understanding about the importance of financial protection. Almost half of respondents in the 2018 Financial Capability and Inclusion Demand Side Survey cited lack of product understanding to be the key reason for not purchasing life insurance and family takaful.