7  The 3-month Euribor rate is very close to the 3-month GBP Libor rate (1.28%) but considerably higher than the 3-month USD Libor rate (0.66%) while the 6-month Euribor rate virtually the same with the six-month GBP Libor rate (1.49%). 8  For example, the short-term (i.e. below one year) bank lending rate was 3.52% in March 2009, some 2.5 percentage points below its peak value (6.03%) reached last October. This is still somewhat higher than the corresponding US bank lending rate at 2.04% in March 2009. 9  Of this overall figure of EUR 790 billion, USD 130 billion refer to the writedowns of euro area large and complex banking groups (LCGBs); while USD 49 billion relate to other euro area banks. 10  Of this total amount of USD 192 billion in capital raised, almost USD 155 billion refer to euro area LCBGs while over USD 37 billion have been raised by other euro area banks. 11  See International Monetary Fund (2009). BIS Review 65/2009  5  Independently of the total potential impact of the financial turbulence and the weak economic activity on euro area banks’ net income and capital position, it is evident that they will need to strengthen their balance sheets.
This needs to be reinforced by substantive improvements in risk management practices, greater alignment between business strategy and risk, and greater appreciation by boards and senior management of insurers on risk issues given the growing complexity and increasing interconnectedness of financial markets and financial sector players. The insurance industry has progressed significantly over the years and is well-positioned to supporting both the recovery process and future growth potential of the economy. As emerging economies rebalance with greater emphasis on private consumption, the social safety net will need to be strengthened, with insurance and pensions now having a greater role. An ageing population will also become an issue in the future. Globally, the number of the aged population that is aged 65 and above is expected to grow dramatically by 2050. Such rapid growth will have major economic and social consequences in many countries. Many nations are finding it increasingly difficult to provide adequately for this segment of the population through state-provided social security. Planning for retirement has therefore become essential both for individuals as well as public policy to ensure sustainable financing to meet retirement and healthcare needs in the long term. An enhanced social safety net would foster greater security in addition to reducing the need for significant precautionary savings. This would in turn promote increased consumption spending. Prospects for higher insurance penetration rate in the region continue to remain positive.