Possible unintended consequences of Basel III and Solvency II

This presentation (based on an IMF working paper) explores similarities and differences between banks and insurers and between Basel III and Solvency II and then highlights possible unintended consequences of Basel III and Solvency II being introduced at roughly the same time

[as pdf]

1Possible Unintended Consequences of Basel III and Solvency II
3Overview of paper
4Typical bank and insurer business models differ
5Although noteworthy overlaps (and conglomerates!)
6Different funding bases (excluding equity)
7Different capital levels
8Different accounting bases
9Basel III and Solvency II: Different histories and drivers
10Basel III and Solvency II Capital Tiering (Pillar 1)
11Calculation of Required Pillar 1 Capital
12Risk Aggregation (Pillar 1)
13Possible unintended consequences
14Cost of capital
15Funding patterns and interconnectedness (1)
16Banks’ debt funding sources by type of investor
17Funding patterns and interconnectedness (2)
18Risk / Product transference (1)
19Risk / Product transference (2)
20Policy considerations
22Important Information

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