CHAPTER 6
Putting the New Framework to the Test
Insurance regulation, often viewed as a dreary backwater by politicians and economists, is as critical as the banking sector in promoting financial stability, economic growth, and consumer protection. Life insurance and pension plans are almost as ubiquitous as mortgages. Their providers hold $50 trillion worth of assets worldwide.1 In the last chapter, I argued that financial stability is best achieved through a transfer of risk based on the different risk capacities between short-term funded institutions like banks and long-term funded institutions such as life insurers and pensioners. Banking and insurance stability are simply different sides ...
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