Possible Unintended Consequences of Basel III and Solvency II
71 Pages Posted: 16 Aug 2011
Date Written: August 2011
Abstract
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.
Suggested Citation: Suggested Citation
Impavido, Gregorio and Al-Darwish, Ahmed I. and Al-Darwish, Ahmed I. and Hafeman, Michael and Kemp, Malcolm and O'Malley, Padraic, Possible Unintended Consequences of Basel III and Solvency II (August 2011). IMF Working Paper No. 11/187, Available at SSRN: https://ssrn.com/abstract=1910490
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