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This presentation (based on an IMF working paper) explores similarities and differences between banks and insurers and between Basel III and Solvency II. It then highlights possible unintended consequences of Basel III and Solvency II on topics such as cost of capital, funding patterns, interconnectedness and product and/or risk migration.

[as pdf]

Slides

1	Possible Unintended Consequences of Basel III and Solvency II
2	Agenda
3	Typical bank and insurer business models differ
4	They also have different funding bases (excluding equity) …
5	Different capital levels …
6	Different accounting bases …
7	And different perspectives on Pillar 1 versus Pillar 2
8	Although some business overlaps (and conglomerates!)
9	Basel III and Solvency II: Different histories and drivers
10	Basel III and Solvency II Capital Tiering (Pillar 1) (1)
11	Basel III and Solvency II Capital Tiering (Pillar 1) (2)
12	Basel III capital requirements
13	Calculation of required Pillar 1 capital (banks)
14	G-SIBs
15	Calculation of required Pillar 1 capital (insurers)
16	G-SIIs
17	Risk Aggregation (Pillar 1)
18	Possible unintended consequences
19	Cost of capital
20	Funding patterns and interconnectedness (1)
21	Funding patterns and interconnectedness (2)
22	Banks’ debt funding sources by type of investor
23	Funding patterns and interconnectedness (3)
24	Risk / Product transfers (1)
25	Risk / Product transfers (2)
26	Policy considerations
27	Summary
28	Important Information

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