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International Capital Rules: Harmonization, Conflict or Competition

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  • Martin F. Grace

Abstract

There is a conflict between the philosophies of United States (US) style capital regulation and that of the European Union (EU). While the conflict looks like it will not evolve into a real trade issue, there is a potential for misunderstanding of the pros and cons of the two systems. This paper will compare and contrast capital regulation in the EU and US focusing on the areas where competition, conflict and harmony may exist. The idea of capital regulation is to minimize the costs of insolvencies. This paper identifies some of the costs involved in capital regulation and offers an initial paradigm on how to compare the systems.

Suggested Citation

  • Martin F. Grace, 2013. "International Capital Rules: Harmonization, Conflict or Competition," NFI Policy Briefs 2013-PB-03, Indiana State University, Scott College of Business, Networks Financial Institute.
    • Handle: RePEc:nfi:nfipbs:2013-pb-03
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    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2013-PB-03_Grace.pdf
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    References listed on IDEAS

    as
    1. Neil Doherty & Richard Phillips, 2002. "Keeping up with the Joneses: Changing Rating Standards and the Buildup of Capital by U.S. Property-Liability Insurers," Journal of Financial Services Research, Springer;Western Finance Association, vol. 21(1), pages 55-78, February.
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    More about this item

    Keywords

    Insurance Capital Requirements; Solvency II; Risk Based Capital Requirements;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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