Policy portal Stability & Supervision

When trust in the financial system disappears, panic sets in: fire sales of financial assets and bank runs can make the entire system collapse. Taxpayers are forced to bail out “too-big-to-fail” institutions to protect essential economic functions (deposits, credit, payment systems).

Mitigating implicit “moral hazard” requires sound prudential policies protecting essential banking services from excessive risk-taking and maintaining adequate capital levels to cover possible losses. Well-resourced, and independent supervision is also key. Finally, prudential regulation must also respond to new risks related to digitalisation (see “Digital Finance”) and climate change (see climate risk under “Sustainable Finance”).

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1 PUBLICATIONS

Speech

Assessing risk properly is key to enable insurance companies to invest for the long term and to tackle climate risk (ECON Hearing on Solvency II and IRRD)

At the ECON Hearing on Solvency II and IRRD, Finance Watch calls for a symetric approach to risk assessment, adapting insurance companies’ capital requirements linked to fossil fuel exposures and creating a resolution funding mechanism to avoid the transfer of losses to policyholders and taxpayers in case of failure (video here)

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