However, the mandates of most central banks, including indeed both the Eurosystem and the Banco de España, also cover other objectives. There is, in particular, an area which deserves special attention in this context. I am referring, of course, to the function of promoting financial stability. It is precisely in this area where the impact of financial integration is less clear. Does financial integration promote financial stability? Or does financial integration put financial stability in danger? As a matter of fact, while the effects of higher integration on per-capita income and on the efficiency of monetary policy transmission have received a lot of attention by researchers, the impact of financial integration on financial stability is under-researched. That is why we are holding this conference. Despite the lack of research, it seems clear that there are some areas where financial integration favours financial stability. Firstly, a more integrated financial system enlarges the opportunities available to investors, lenders and borrowers to diversify the different risks associated with their financial decisions. Through such diversification, they should become less exposed to idiosyncratic shocks, asset prices and financial flows should behave in a smoother way and as a result, the risk of financial distress should be reduced. Secondly, in a more integrated system, financial intermediaries would find it easier to grow and at the same time would find the incentive to do so in the enlargement of their potential markets.

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.