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So let me guess, is this about enabling companies and finance institutions to use their ‘rainy day money’ to play with, instead of keeping it back as a strategic back stop?
Thatcher more or less did this didn’t she?
So, it explains why the CBRA is well padded out perhaps!
Your government wants you to take on more risk but will do sod all themselves to promote growth! But don’t worry, we’ll just bail you out if it all goes to shit. You’ll still come out smelling of roses and only the little people will suffer.
Vacuous. How much longer are we going to have to endure this?
Two points I would make.
First, insurance is a risky business. Any regulation that reduces the amount of liquid assets held “just in case” will make insurers less creditworthy. That is a fact.
If this is being touted as a way to get money for investment into UK infrastructure then it is absurd. Why not have the insurers keep their reserves in gilts and have the Government use that money they get from the sale of those gilts to make these infrastructure investments? (MMTers will rightly be appalled by this “household style” analysis but I make it anyway). Let the risk of these projects lie with where it is most appropriately taken – government.
We all know where the extra return will go if the “risky” investment is successful – to executives and shareholders; and if it all goes belly up? Well, there will be a bailout. Our large insurers are “too big to fail”.
Second, this is also being billed as great Brexit opportunity. We can break free from EU regulation which is deemed dreadful! Well, the EU knows that the current regulations are not delivering as they should and are going to change them. It would be far better to be at the table shaping that change.
We have seen this movie before in banking; competitive de-regulation at the behest of the industry and trust me, it is not a Rom-Com!
I think you are right
Pension funds do not need to invest in infrastructure – government does
They can save with the government