First, over the medium and long term, growth is determined by productivity, investment and the quantity of labour mobilised in the economy. At this time horizon, there is no trade-off  2  BIS Review 92/2007  between inflation and growth, and monetary policy is neutral with respect to output and employment. Second, inflation itself is strongly influenced by the expectations of economic agents, both households and enterprises. These agents are increasingly well informed. They quickly perceive developments that threaten their purchasing power or the value of their savings. If monetary policy is likely to encourage inflation, they adjust their behaviour very rapidly, for example by asking for higher wages, thereby triggering a wage-price spiral; or by demanding greater remuneration of their savings, resulting in higher long-term interest rates and slower growth. How, in the ECB Governing Council’s view, can monetary policy make an effective contribution to economic growth? First and foremost, by anchoring inflation expectations. If monetary policy is credible, confidence prevails and economic agents make their decisions in a more reliable environment. Economic signals are less blurred by concerns about inflation. Shocks are more easily absorbed, or at least are less amplified by economic agents’ attempts to shelter against the risk of inflationary pressures. Overall, the economy is less volatile, business cycles less pronounced and economic growth steadier. More fundamentally still, maintaining the internal value of money means preserving consumers’ purchasing power. French citizens, who are clearly committed to price stability, know this.
Other approved decisions are as follows: a decision to allow GCC citizens to exercise the activities of insurance services, transport services, in its different forms, and real estate services, the application of the Same National Treatment on GCC citizens in the field of jointstock companies’ shares ownership and trading and GCC Citizens Real Estate Ownership Regulation in the Member States for residential and investment purposes. Women Right to Obtain a Housing Loan from the Real Estate Development Fund, when she is responsible for her family, has also been approved. The Ministry of Housing has been established and it has received allocations of SAR 250 billion. The Real Estate Development Fund’s maximum real estate loan has been increased to SAR 500 thousand from SAR 300 thousand. The draft Arab Agreement on Combating Cyber Crimes and the draft Arab Agreement on Combating Money Laundering and Terrorist Financing have been approved. Financial Leasing Law, which aims to provide a funding formula for joint-stock companies specialized in financial leasing, has been approved. SAMA has been entrusted with the supervision and control function over financial leasing. Real Estate Mortgage Law has been approved to provide the necessary guarantees, when practicing real estate finance activities, and define the mortgage contract parties’ rights and obligations and provide more flexibility in utilizing real estate assets.