pablo garcia silva : changing landscape - the role of the insurance sector in meeting emerging economic and social challenges welcome remarks by mr pablo garcia 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. most central banks have continued and / or accelerated their interest rate hikes, with the fed's actions standing out. this has further tightened financial conditions, especially for emerging economies. overall, risk aversion has increased, affecting asset prices and volatility in global financial markets. risk premiums have increased : higher cds spreads across latam and other emes as well as higher interest rates. higher market volatility : option implied volatilities have increased during this calendar year, both in the us stock and bond markets. the tightening in global financial conditions is also apparent domestically. in the case of chile, we have had a persistently weak exchange rate along with high 2 fx and interest rate volatility. during this year, the clp has depreciated 15 % and long - term interest rates ( bcu10 ) increased 26bps. in contrast to pre - 2019 situation when chile ranked low in long term interest rate volati

significant participation in financial conglomerates, and the fiscal contingency embedded in life annuities and disability and survival insurance contracts. despite the progress made by the cmf, and the evolution of the industry in terms of risk management and corporate governance enhancements, moving towards a robust legal framework of risk based supervision in the insurance industry is essential for the preservation of financial stability. let me conclude. a deep capital market remains critical to economic development and to ease macroeconomic adjustment in the face of global shocks. the shallowing of our domestic capital market over the past few years has deteriorated the access of firms and households to long term finance. this puts into focus the need to reestablish long term savings as well as ease the functioning of our markets. the recent proposed legal changes included in the resilience bill, as well as the broad support that the proposed pension reform should promote long term savings are welcomed, and should support financial stability. thank you. 3 / 3 bis - central bankers'speeches