One of the most relevant areas of work under way seeks to correct the excessive variability of risk-weighted assets (the denominator of the capital ratio) prompted by the use of insufficiently homogeneous internal models. Such heterogeneity leads to inadequate risk measurement and generates competitive distortions, harming those institutions subject to more demanding regimes of model supervision. The current challenge is to come up with a parameterisation of the new requirements that enables risk measurement to be enhanced without significantly increasing capital requirements for the system as a whole, as this is one of the commitments announced by  4  BIS central bankers’ speeches  global supervisory authorities, in order to hold prudential requirements at levels compatible with the pursuit of banking activity on a proper footing. Banks must also meet the requirements stemming from the new resolution regulations, which seek to minimise the need to use public funds to manage bank crises. In particular, under the Bank Recovery and Resolution Directive (BRRD), significant institutions shall, in addition to meeting the established capital requirements, have a minimum volume of liabilities enabling losses to be absorbed should it be necessary. That is to say, they shall have debt instruments at hand that may be converted into capital if they experience problems of viability. These requirements will likely prove a binding restriction for some financial institutions. The issuance of these instruments may pose a challenge, especially for unlisted banks with little experience in the issuance of convertible instruments or of subordinated debt.
BIS central bankers’ speeches  5  the SMU Centre for Silver Security and EDHEC Risk Institute-Asia. The SMU Centre for Silver Security for instance, is conducting applied research on financial products and markets for the silver industry, which would allow insurers to develop and commercialise products for the at-retirement market. Conclusion 27. Let me conclude. The insurance industry will encounter significant headwinds in the years ahead. I understand that the conference speakers will be touching on many pertinent topics, including the macroeconomic outlook and investment implications, asset allocation strategies in a world of low bond yields, and whether there is a right level of asset risks that insurers should assume. 28. The inaugural Asia Investment Management Summit for insurers, organized by Asia Insurance Review here in Singapore, is very timely. It will be an extremely useful platform for all stakeholders to engage in constructive dialogue on how we can navigate the current environment successfully. On this note, I wish all of you a rewarding and fruitful conference. Thank you. 6  BIS central bankers’ speeches