The regulatory situation in Britain is still deteriorating, and will reduce growth and jobs without net benefits. The unwarranted European assault on the insurance industry continues; as Richard Ward, the Lloyd’s of London boss put it, the City’s insurers could almost have bailed out Cyprus given the amount of money they have already spent on Solvency II (in Lloyd’s case, the bill has already reached £300m).
All of the regulators concerned should take a look at a short document published by the Institute of Economic Affairs, penned by Forrest Capie and Geoffrey Wood. As the authors point out, there were no capital requirements or rules of this nature until 1979 – and yet the banking system went through decades of stability, with institutions voluntarily holding the equivalent of 13-14 per cent capital ratios between the 1920s and 1960s.
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