- Insurance and occupational pensions industry faces risks resulting from high concentrations of exposures to sovereigns and banks.
- Stress tests indicate that a period of low yields would make the solvency position of the insurance industry worse on average, after a year of high losses resulting from natural disasters.
- ECB: Crisis Management and Bank Resolution – Legal working paper
- Examines the legal difficulties of cross-border resolution – argues that the risks that complex groups generate” must be met with “the imposition of costs”.
- Existing national resolution regimes,
notably the UK and Germany, are a big step forward, but they cannot accommodate
cross-border issues.
- BIS: Jaime Caruana: Financial stability and risk disclosure
- To be effective in promoting market discipline, disclosure must be complemented by strong incentives for counterparties to engage in monitoring.
- The public sector's role in promoting transparency arises from a number of market failures, including the externalities to be gained from common standards, the "free rider" problems that may lead to too little investment in producing and gathering financial information, and the tendency of markets to overreact to bad news when the information environment is clouded.
- Guided by these considerations, the Financial Stability Board and the Basel Committee on Banking Supervision have long supported improvements in transparency, through their work on accounting, disclosure templates and aggregate market data.
- At the same time, industry and investor representatives need to play a key role in developing disclosure standards.
- Accounting standards need to converge,
standards for the discussion and analysis that accompany financial statements
need to be established, and external auditors need to insist on higher-quality
risk disclosures.
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