Carlos Montalvo, executive director at EIOPA, said that "Solvency II is an independent regulatory process that, in terms of capital charges, has been testing different alternatives and approaches for the last 10 years".
Montalvo went on to say that EIOPA saw no link between the banking and insurance debates, nor did it see a need for any type of change, particularly if that change were triggered by "external decisions" unrelated to the Solvency II legislative process. Montalvo also pointed out that a "clear" distinction needed to be made between the concepts of solvency capital requirements and liquidity buffers.
Whilst the first refers to the amount of capital needed to cover unexpected losses up to a certain confidence level – 99.5 per cent in a one-year time horizon under the Solvency II framework – the latter seeks to ensure that banks have sufficient, readily realisable assets to manage a sudden, short-term outflow of funds.
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