Global Financial Regulatory Trends and Challenges for Insurance and Pensions
The financial system is undergoing an important regulatory overhaul, gradually increased during the last five years. Solvency II and Basel III are two of the most relevant global initiatives that try to reformulate the future landscape for finance. Under this scenario the Insurance and Pensions (I&P) industry, less affected in the crisis, is undergoing important changes that come from different channels. In this regard, this paper focuses on the main global regulatory trends affecting I&P, either directly from its own regulation or indirectly from changes in the banking sector regulation and strategies. After discussing the relevant characteristics of the different pieces of regulation, this study concludes that there is a great disparity among countries in the initial situation of the I&P sectors, both in terms of solvency levels and the diversification/riskiness of investment portfolios, which will cause different effects from a country base perspective: Notwithstanding this, there is a common challenge about how to reconcile more risk-sensitive regulation with the search for a yield in a world with consistently low interest rates. As a consequence of these new pieces of regulation, it is possible to anticipate a scenario of: higher fees; lower appetite for corporate debt; higher cost of derivatives hedging; reduced securitisation activity, an I&P industry more involved in infrastructure funding, and more real estate financing activity from the insurance sector. As regards sovereign debt, the present regulatory statu quo favours a higher demand of these securities by I&P, but the debate on whether to maintain its zero risk weight in Basel III and Solvency II may imply some changes in the future. What is clear in the near future is that regulators of banks, pensions and insurance sectors should analyse the interactions of new regulations; the associated trade-offs and risks and their consistency with a view to avoid creating wrong incentives for the long run
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dal Bianco, Marcos & Camacho, Maximo & Perez Quiros, Gabriel, 2012.
"Short-run forecasting of the euro-dollar exchange rate with economic fundamentals,"
Journal of International Money and Finance,
Elsevier, vol. 31(2), pages 377-396.
- Marcos dal Bianco & Maximo Camacho & Gabriel Perez-Quiros, 2012. "Short-run forecasting of the euro-dollar exchange rate with economic fundamentals," Working Papers 1203, Banco de España;Working Papers Homepage.
- Maximo Camacho & Marcos Dal Bianco & Gabriel Perez Quiros, 2012. "Short-run forecasting of the euro-dollar exchange rate with economic fundamentals," Working Papers 1201, BBVA Bank, Economic Research Department.
- Mariana A. Toran & F. Javier Morales & Sara G. Castellanos, 2012. "Analysis of the Use of Financial Services by Companies in Mexico: What does the 2009 Economic Census tell us?," Working Papers 1216, BBVA Bank, Economic Research Department.
- Luis J. Carranza & Angel Melguizo & David Tuesta, 2012. "Matching Contributions for Pensions in Colombia, Mexico, and Peru: Experiences and Prospects," Working Papers 1232, BBVA Bank, Economic Research Department.
- Alma L. Garcia-Almanza & Biliana Alexandrova-Kabadjova & Sara G. Castellanos Pascacio, 2012.
"The Adoption Process of Payment Cards -An Agent- Based Approach,"
1213, BBVA Bank, Economic Research Department.
- Biliana Alexandrova-Kabadjova & Sara Gabriela Castellanos Pascacio & Alma L. García-Almanza, 2012. "The Adoption Process of Payment Cards -An Agent- Based Approach," Working Papers 2012-02, Banco de México.
When requesting a correction, please mention this item's handle: RePEc:bbv:wpaper:1321. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (OSCAR DE LAS PENAS SANCHEZ-CARO)
If references are entirely missing, you can add them using this form.