Pablo García Silva: Changing landscape - the role of the insurance sector in meeting emerging economic and social challenges Welcome remarks by Mr Pablo García Silva, Deputy Governor of the Central Bank of Chile, at the Annual Conference of the International Association of Insurance Supervisors (IAIS), organised by the Financial Market Commission (FMC), Santiago, 10 November 2022. *** This year´s conference is on the role of the insurance sector in meeting emerging and economic and social challenges. This is quite appropriate, as past are the days when longevity risk, low interest rates, anemic growth and secular stagnation seemed to be the main concerns of the insurance industry. Recent years have put significant stress on global capital markets and on the insurance industry, through high inflation and disruptions in financial markets. Looking ahead, supervisory and regulatory authorities need to be on top of these developments to adapt accordingly. The external macroeconomic scenario has evolved negatively in recent months, and risks for global financial stability remain high. A sharp rise in inflation -to which the Russia-Ukraine conflict has certainly contributed- has required a decisive response from central banks, which have had to raise their monetary policy rates considerably. Global growth outlook has weakened, with increasing risks of a global recession in 2023. Thus, financial conditions and liquidity have tightened. The Fed's toughening tone and decisions -and the uncertain future trajectory of its policy- have propitiated a cycle of global strengthening of the dollar and increased the sensitivity of the financial markets to new developments.

This additional distortion has given rise to further instability in the financial system, both directly and through its interplay with the weaknesses of the public sector. Given the central role played by sovereign debt in financial markets, its dysfunctional behaviour threatened both financial stability and the transmission of monetary policy. In this context, the Eurosystem launched its Securities Markets Programme (SMP), which entails the outright purchase of debt instruments to address the malfunctioning of securities markets and to ensure the proper transmission of monetary policy impulses to the wider economy and, ultimately, the general price level. In addition, in order to mitigate the impact of the sovereign debt crisis on the banking sector’s ability to refinance its activities, the ECB temporarily reversed the phasing-out of its nonstandard measures. It also took collateral-related measures to support access to central bank liquidity by banks located in the countries that were committed to implementing economic and financial adjustment programmes negotiated with the European Commission, in liaison with the ECB, and the IMF. There is no denying that the financial crisis has put the euro and the economy of the euro area to the test. During the crisis the euro area public authorities have proven their capacity  2  BIS central bankers’ speeches  and willingness to take the necessary emergency steps to maintain financial stability. However, the crisis has clearly shown the need to undertake a number of reforms in order to address some institutional and structural weaknesses in our economies.