At which point, for example, did the run up in UK house prices over the past 10 years cease to be warranted by a change in economic fundamentals, such as the rise in the number of households and the move to a low and stable inflation environment? Likewise, at which point did it become clear that sub-prime lending had ceased to be a beneficial financial innovation with the scope to allow people who had not previously had access to credit the chance to own their own home and had instead become a source of international financial instability? These are difficult judgements. They involve second guessing outcomes generated by financial and economic markets. Policymakers will inevitably sometimes get the assessment wrong, with costly repercussions. But these judgements cannot be ducked. Monetary policymakers have to form views about a range of uncertain and ill-defined issues, such as the level of potential supply and the credibility of policy. The sustainability of asset prices and economic imbalances are no different. Ultimately, a policy has to be set even if explicit judgements are not formed. But policymakers also need better tools to back up these judgements with actions. Shortterm interest rates are a blunt instrument best deployed maintaining a broad balance between nominal demand and supply. They are not well suited to the task of managing asset price bubbles and economic imbalances. They may be wholly ineffective in addressing some types of imbalances, particularly those with an international dimension.

Dear Audience, SAMA undertakes annual supervisory visits to insurance companies to make sure that they operate efficiently and professionally and that they fulfill technical and regulatory requirements to ensure better profitability and customers’ satisfaction. SAMA also regularly monitors soundness of insurance companies’ financial positions to ensure that they are able to meet their contractual obligations. SAMA will continue to exert supervisory and control efforts using all means to ensure the optimality of insurance operations. BIS central bankers’ speeches  1  Dear Audience, Insurance industry has progressed well in recent years as its contribution has grown equivalent to one percent of GDP in 2010. Total estimated written premiums have increased by 12.4 percent to Rls 16.41 in 2010 from Rls 14.6 percent in 2009. This clearly indicates growing awareness about various insurance products including public insurance products, health insurance and protection and savings insurance by individuals and various organizations operating in the Kingdom. Insurance claims are projected to have reached Rls 4.7 billion in 2010 compared to Rls 5.8 billion in 2009. Insurance claims that are made against damages are integral part of insurance activities. They contribute to reassuring, stabilizing, and securing individuals and organizations. Recent rainfalls that had caused substantial losses in the city of Jeddah have proved the importance of insurance and its benefits and compensations for property losses. SAMA has directed all insurance entities to promptly compensate customers according to their insurance policies, and facilitate procedures for receiving claims and processing them.