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EIOPA is also working intensively on the review of the IORP Directive, advising the EU Commission on the ways to introduce a risk-based framework for the supervision of occupational pension funds.
One of the major consequences of the financial crisis was the fall of confidence and trust in the financial sector and increase in suspicion on all areas of financial innovation. Unfortunately, the benefits of financial innovation have been overshadowed by the costs of some activities that went really bad. Bernardino believes regulators and the industry need to take a fresh look at this area. Financial innovation tools can be a useful way for investors to protect themselves against unavoidable risks. However, they should be used to facilitate risk transfer and access to funding within the real economy and not to help institutions to arbitrage regulations and make balance sheets look safer than they are.
In order to increase long-term stability and regain consumer confidence in the financial system, we need to proceed with the reforms not only by adapting regulation but also by changing behaviour.
Supervisors should encourage realistic risk assessment and pricing. Market participants should take concrete steps to promote responsible business conduct. Overall EIOPA also need to reinforce preventive risk-based supervision and timely enforcement.