that are too low for too long can eventually lead to distortions. in particular : • to a misallocation of resources, which ultimately leads to lower potential growth, • to excessive capital inflows into a number of emerging economies with exchange rate effects and credit risks, • and to reduced incentives for governments, banks, and corporates to adjust. these costs of very low interest rates are real, and they rise over time. of course, these costs have to be weighed against the need for exceptional monetary policy measures in a crisis. these transmission problems bring me to the third dimension : we have to recognise the limits to what monetary policy can achieve in current conditions. the ecb can and has addressed bank funding problems. but there are other barriers holding back bank lending, like heightened risk aversion, a lack of loan demand and insufficient capital. and above all, bank lending will only fully come back when the bank balance sheet repair is completed in all member states. the ecb cannot remove these constraints. this is where our responsibility ends and that of governments or other eu institutions begins. monetary policy is not an all - purpose weapon for any kind of economic illness. how can we overcome the political challenges to adjustment? some of you might react to this that governments are already being asked to do too much. that the costs of adjustment are too high in some countries, and at some point, people will simply not take anymore. this links to my second question : how can we overcome the political challenges to adjustment? bis central bankers ’ speeches let me be clear : every policy - maker in the euro area understands that the process of rebalancing within the euro area is painful. we are deeply concerned by the levels of unemployment we are seeing, in particular for young people. in spain, more than 5 in 10 young people currently cannot find work. in greece, the figure is almost 6 in 10. this is unacceptable – and it is also dangerous. but the political challenge, i believe, comes not from the process of adjustment itself. people can accept a period of hardship if it is necessary. it comes from the belief that there are better alternatives available that are being denied. this is what causes people to reject adjustment, or to blame others at home or abroad for their predicament. this is fine as far as it goes : we are democracies and we need a robust public debate. but it becomes a problem when the debate does not contain all the facts. if politicians

for the entry of new players to engender competition, which would in turn promote greater innovation and raise the efficiency of the incumbent insurers. mas also worked on deepening the local talent pool and fine - tuned the already prudent regulatory framework. 6. ten years on, these efforts have yielded significant results. the singapore insurance industry, which saw a number of acquisitions, consolidations and new entrants, experienced strong growth, with total assets tripling to s $ 136bn over the past decade. the industry has also matured in terms of the breadth and depth of products and services offered. for example, we see increased capacity in writing specialised risks like aviation, energy, marine and political risks. for the life insurance industry, we have also seen greater product innovation as well as increased interest from insurers offering more sophisticated products catering to the needs of the high net - worth and mass affluent segments. future challenges and opportunities 7. but greater challenges and opportunities lie ahead. enhancing risk management capabilities 8. the recent global financial crisis has underscored the importance for financial institutions to have strong risk management capabilities. the use of risk management tools such as stress testing, for example, helps identify potential risks, and allows countermeasures to be instituted early. insurers in singapore would have to keep abreast of developments internationally, and should continually look for ways to deepen their risk management tools and capabilities. income is no exception. but unlike some of the other insurers that are part of larger global financial institutions and can therefore leverage on their parents ’ risk management expertise, income does not have such an advantage. these global financial institutions have widely - tested risk management practices and more established risk management cultures, given their richer experience. income would have to grow its risk management expertise internally, but it would do well to learn from these global players ’ recent experiences. strengthening governance 9. however, having risk management tools and capabilities alone will not be enough. the challenge is often in successfully integrating enterprise risk management into the insurer ’ s business, and this would require effective governance. as we have seen from numerous case studies during the financial crisis, weak corporate governance is often the key reason for the failures of financial institutions. 10. much work continues to be done in developing regulatory requirements on governance in many jurisdictions. in singapore, mas has proposed enhancements to its corporate governance regulations and guidelines, drawing lessons from the recent financial crisis and international developments. the key proposals include strengthening