They have reduced their budget deficits, pushed down their inflation rates to less than 2%, and brought their growth rates close to 3%. Favourable global economic conditions made it possible to create an environment suitable for the proper functioning of the system. Meanwhile, the European Monetary Institute completed the necessary preparations for launching the ECB, and transferred its responsibilities to that Bank at the beginning of July 1998. At its founding, there was a broad consensus that the ECB should be independent. There were continuing discussions about its main target, however, and even though this question seems to be resolved, sometimes it still appears on the agenda. The main point being discussed is that while price stability is specifically mentioned in the constitutional agreement as an objective of the ECB, the role of the growth and economic stability objectives is less clear. It is generally agreed that the primary task of central banks should be price stability, but some still argue that the price stability objective should not conflict but should cooperate with the growth and stability objectives. Others insist that since the existence of price stability brings about high employment and sustainable growth in the medium and long term, there is no conflict between the growth and price stability objectives. I believe that the ECB’s present policies, based on all these discussions, aim at price stability as its primary task, with sustainable growth and low unemployment as major objectives.

BIS Review 134/2007  3  While consistency in regulatory and supervisory approaches will contribute towards overall financial stability and increased regulatory as well as business efficiency, it is important to appreciate the fundamental differences between different market players. As someone put it, notwithstanding current trends in financial conglomeration, banks will always be banks, and insurers will always be insurers. As such, the risks stemming from the liability side of an insurance company is far more significant than the asset side, while the reverse is generally true for banks. While some dimensions of this are changing, such differences must be properly catered for in the regulatory framework as well as in insurers' own internal risk management practices. Human intellectual capital plays a pivotal role in driving the industry's future and competitiveness. The environment of increasing complexity in financial services that is accompanied by increasingly sophisticated consumer expectation place new demands on the skill sets and competencies of regulators and industry professionals. Adoption of the highest standards of professionalism and integrity is essential in generating public confidence in the insurance industry. It is therefore critical for us to continuously invest in human capital as the pace of progression for the insurance industry would to a large extent depend upon the capability of those working in the industry - their skill set, expertise and competency. Unfortunately for all of us, similar to other emerging economies, there is a scarcity of qualified and well trained personnel to meet the growing and increasingly complex needs of the industry.