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IMF Working Paper Monetary and Capital Markets Department Possible Unintended Consequences of Basel III and Solvency II

Published online by Cambridge University Press:  15 August 2013

Ahmed Al-Darwish ,
Michael Hafeman ,
Gregorio Impavido ,
Malcolm Kemp  and
Padraic O'Malley
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Abstract

This Working Paper should not be reported as representing the views of the IMF.

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

In today's financial system, complex financial institutions are connected through an opaque network of financial exposures. These connections contribute to financial deepening and greater savings allocation efficiency, but are also unstable channels of contagion. Basel III and Solvency II should improve the stability of these connections, but could have unintended consequences for cost of capital, funding patterns, interconnectedness, and risk migration.

Keywords

G21G22G28Basel IIISolvency IICost of CapitalFundingInterconnectedness
Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 19 , Issue 2 , July 2014 , pp. 273 - 325
Copyright
Copyright © Institute and Faculty of Actuaries 2013 

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Footnotes

†

Ahmed Al-Darwish is Special Appointee at the IMF; Michael Hafeman is an actuary and consultant on insurance and pension supervision; Gregorio Impavido is Senior Financial Sector Expert at the IMF; Malcolm Kemp is Managing Director at Nematrian and an Adjunct Professor at Imperial College Business School, London; and Padraic O'Malley is Consulting Actuary at Milliman. The authors are grateful for the comments received from Nick Kitching (AVIVA); Nicolas Jeanmart (CEA); Meta Zähres (DB); Gonzalo Gasos (EBF); Carlos Montalvo and Jarl Kure (EIOPA); Paul Sharma (FSA); Dwight Jaffee and Johan Walden (Haas B.S., U.C. at Berkeley); Tony Coleman and David Ingram (IAA); Daniel Hofmann and Dave Finnis (IAIS); and Ken Chikada, Jules Erik De Vrijer, Ceyla Pazarbasioglu, Kate Seal and Rodolfo Wehrhahn (IMF) at various stages of the project. This paper reflects the views of its authors, not necessarily those of the affiliation institutions. The usual caveat applies.

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