How insurers differ from banks: Implications for systemic regulation

Christian Thimann 17 October 2014

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Regulation of the insurance industry is entering a new era. The global regulatory community under the auspices of the Financial Stability Board (FSB) is contemplating regulatory standards for insurance groups that it deems to be of systemic importance. Nine insurance groups received this FSB classification in 2013, and the design of systemic regulation for these groups is now in progress.

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Topics:  Financial markets

Tags:  insurance, reinsurance, banking, financial intermediation, regulation, systemic risk, maturity transformation, BASEL III, investment, capital, capital requirements, bail-in, loss absorption

Inheritance flows in Sweden, 1810–2010

Jesper Roine, Henry Ohlsson, Daniel Waldenström 08 August 2014

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Thomas Piketty’s book Capital in the Twenty-First Century (Piketty 2014) has received enormous attention since its publication. A fundamental question raised is whether a person’s lifetime income is the result of his or her own efforts or, alternatively, founded on inheritance. Even for those who believe that inequality does not matter as long as it is based on one’s own effort, the potential of a return to high levels of inequality based on inheritance is a totally different matter. To many people, such a development would be much less acceptable than increased inequality per se.

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Topics:  Economic history Europe's nations and regions Poverty and income inequality

Tags:  Sweden, Inequality, inheritance, wealth, capital, capital accumulation

Capital is not back: A comment on Thomas Piketty’s ‘Capital in the 21st Century’

Odran Bonnet, Pierre-Henri Bono, Guillaume Camille Chapelle, Étienne Wasmer 30 June 2014

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The impressive success of Thomas Piketty’s book (Piketty 2014) shows that inequality is a great concern in most countries. His claim that “capital is back”, because the ratio of capital over income is returning to the levels of the end of the 19th century, is probably one of the most striking conclusions of his 700 pages. Acknowledging the considerable interest of this book and the effort it represents, we nevertheless think this conclusion is wrong, due to the particular way capital is measured in national accounts.

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Topics:  Global economy

Tags:  house prices, housing, Inequality, rents, housing bubble, capital, wealth inequality

Capital controls in the 21st century

Barry Eichengreen, Andrew K Rose 05 June 2014

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Capital controls are back. The IMF (2012) has softened its earlier opposition to their use. Some emerging markets – Brazil, for example – have made renewed use of controls since the global financial crisis of 2008–2009. A number of distinguished economists have now suggested tightening and loosening controls in response to a range of economic and financial issues and problems. While the rationales vary, they tend to have in common the assumption that first-best policies are unavailable and that capital controls can be thought of as a second-best intervention.

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Topics:  International finance

Tags:  IMF, capital flows, global financial crisis, capital controls, capital, Macroprudential policy

Selling assets to raise corporate capital

Alex Edmans, William Mann 15 February 2014

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Asset sales are a means of financing

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Topics:  Financial markets Frontiers of economic research

Tags:  asymmetric information, capital, adverse selection, information asymmetry, lemons problem, asset sales, financing

Capital shortfall: A new approach to ranking and regulating systemic risks

Viral Acharya, Robert Engle, Matthew Richardson 14 March 2012

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The most severe impacts of the financial crisis of 2007–09 arose immediately after the failure of Lehman Brothers on 15 September 2008. It is natural to wonder whether the US should have arranged for an orderly rescue of Lehman as it did for Fannie Mae and Freddie Mac the week before and as it did for AIG, Merrill Lynch, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, Washington Mutual, and Wachovia as well as many smaller and foreign banks over the next days and weeks. How much capital would have been necessary ex post to arrange such an orderly rescue?

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Topics:  Financial markets International finance

Tags:  banks, systemic risk, capital

The illusion of bank capital

Raihan Zamil 07 May 2011

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How much capital should banks hold to cover their risk? That question has been thrown back and forth among policymakers, bankers, and academics for years – and now, with the global crisis still lingering, the debate is more intense than ever.

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Topics:  Financial markets International finance

Tags:  financial regulation, capital adequacy ratio, capital