3/11  Some of these new macroprudential tools, in particular those based on the borrowers’ ability to pay, have already been introduced into the national legislation of other EU Member States to prevent excessive easing of credit underwriting standards by banks and to contribute to the sustainability of household and corporate debt. These new instruments complement those already available to the Banco de España included in the European legislation: the countercyclical capital buffer, the systemic risk buffer and the buffer for systemic banks, among others. All in all, this new institutional setting is a significant step forward in reinforcing financial stability in Spain. The importance of a macroprudential policy framework In my view, the introduction of macroprudential policy instruments to complement monetary and fiscal policy is probably one of the most significant policy developments following the global financial crisis. For countries in a monetary union, like Spain, the introduction of these tools is particularly important. Indeed, it is one of the few domestically managed levers available to guarantee the stability of the domestic financial system. However, the design of macroprudential policy poses significant challenges. This is mainly because there is little experience in the use of these tools and scant empirical evidence on their effectiveness, at least when compared with fiscal and monetary policy tools.
I recommend giving it a read: the report itself is a treasure trove of data, and the results do you credit. The average solvency capital requirement (SCR) coverage ratio on the French market climbed from 222% in 2016 to 238% in 2017. What’s more, in the first quarter of 2018, the French insurance market overtook Germany and the United Kingdom to become Europe’s number-one market, with over EUR 35 billion in direct premiums written in non-life insurance and over EUR 2.100 trillion in technical provisions. It also leads in investment capacity: commanding total assets of EUR 2.7 trillion in September 2018, France’s insurance sector is far and away the largest institutional investor in Europe, accounting for over one-third of the total assets of euro area insurers. In comparison, France makes up 21% of euro area GDP. Insurers, then, are a crucial asset for France, and their critical role in financing the economy can and indeed must grow further. Corporate equity is vital to innovation and hence to a vibrant economy, but in mid-2018 equity was equivalent to just 77% of GDP in the euro area and 76% in France, compared with 124% in the United States. II. Tapping into regulatory opportunities. I would like to start this section off by noting that France’s introduction of a flat tax on capital income on 1 January has not had the slightest detrimental effect on life insurance, despite fears on this score within your industry.