Solvency II added the strong argument of capital absorption to insurers’ deep-rooted reluctance to invest in securities that are not perceived as very safe. The issue of financial support for SMEs, and the part that insurance companies can play in this, is not just an Italian problem, but rather a European one.
More fundamentally, the Risk Based Supervision approach will inculcate the requisite “risk management culture” in banks before Basel II implementation can be considered. The Central Bank recognises that the structure of banking institutions is increasingly evolving and becoming more complex due to business linkages with the non-bank financial associates, affiliates and subsidiaries.