However, it may make sense to assign the objective of financial stability to the central bank, if the central bank is given control of the appropriate supervisory, regulatory and crisis management instruments. Whether giving the central bank such a broad remit would also be the best solution is too complex an issue to address in this context. The fact that financial-stability policy and monetary policy are distinct and different does not mean that there is no interaction between each policy and the other policy’s objectives. Monetary policy affects the real economy and thereby profitability, asset prices and balance sheets. Thereby it affects financial stability. Financial-stability policy directly affects spreads, lending and other aspects of financial conditions as well as the transmission mechanism of monetary policy. This means that monetary policy should normally be conducted taking the conduct of financial-stability policy into account, and financial-stability policy should be conducted taking the conduct of monetary policy into account. This is similar to how monetary policy is conducted taking the conduct of fiscal policy into account, and vice versa. Note that this way of conducting monetary policy and financial-stability policy – in line with a non-cooperative Nash equilibrium rather than a coordinated equilibrium – does not depend on how the authority for financial-stability policy is shared between different institutions. It should be conducted this way regardless of whether the central bank has the sole authority or whether it is shared between several institutions. Thus, under normal conditions, financial stability is handled by financial-stability policy, not by monetary policy.

•  London controls more than 60 billion pounds in premiums, which makes the London market twice the size of Bermuda, three times that of Switzerland, and more than 10 times bigger than Singapore. With its wealth of insurance and specialist risk capacity, London insurance is well positioned to ride the growth in Asian demand. But insurers will benefit from closer proximity to markets, information, and talents. Global insurers and brokers are responding to a growing preference for local placements by setting up local offices in high growth markets to understand their clients better and to be more responsive to their needs. This is where Singapore and London can play complementary roles. London with its unparalleled insurance expertise and experience, and Singapore, with its market proximity and client knowledge can collaborate on providing insurance and risk management solutions that are, relevant, appropriate and responsive to Asian needs. Conclusion The fascinating origins of Lloyds, over 300 years ago – in a coffee house where seafarers gathered to swap intelligence on their trade – illustrates the enduring power of information, networking and the centrality of markets. As with Lloyd’s coffee house, the essence of financial centres lies in connecting markets and people to provide innovative solutions to further economic prosperity. The rising demand for financial services in Asia offers tremendous opportunities for London and Singapore to strengthen our connections for sustainable insurance growth. Thank you. BIS central bankers’ speeches  5