commenced just a few days before the enactment of ipsa, resulted in an intense period of supervisory activity and application of ipsa provisions. some administrative features of ipsa have proved cumbersome to utilise and could be improved. issues arising amongst some insurers in relation to matters such as capital management and the quality of risk management and governance sometimes revealed scope for improvements in the form of more specific definitions or guidance. more specific provisions and definitions and clearer guidance on some matters would reduce scope for outcomes to be quite so dependent on firm ’ s interpretation of sufficient selfdiscipline. solvency margin settings is one area in which provisions might be made more specific. we intend to re - start the review of the solvency standards alongside the broader ipsa review in october, applying the same regulatory pillar philosophy by evaluating prudential safety against risks. solvency standards define the amount of capital an insurer is required to hold to protect against costs from unforeseen events. a criticism of the approach towards capital adequacy within the current solvency standards is that it represents something of an “ all or nothing ” solvency measure whereby a solvency ratio above 100 % ( or any alternative regulated figure ) is taken to be adequate and a ratio of less than 100 % is taken to be inadequate. thought will be given to a more graduated approach where there is more than one level of capital requirement. using such an approach, the different levels of capital requirement provide trigger points for intervention. the closer the trigger point is to the minimum capital requirement, the greater the level of supervisory intensity or intervention. any buffer above the statutory minimum is currently at the discretion of the insurer, although the reserve bank can impose higher solvency margin licence conditions. over the years, we have observed a declining trend in solvency margins that may be illustrative of a key difference in approach between insurers and the prudential regulator. insurers must balance the need to maintain a sensible level of capital strength against the expectations of investors for a return on investment. higher levels of capital make for a more resilient insurer but at the cost of lower return on equity. prudential regulators tend to focus on low probability but high impact risks, or ‘ tail end risks ’, and a concern about the what - ifs in the event of extreme impacts. of course, checks and balances exist within insurers, but without prudential oversight, competitive forces alone are

ardian fullani : china - europe economy – future challenges and opportunities address by mr ardian fullani, governor of the bank of albania, at the china - europe economists symposium on “ china - europe economy – future challenges and opportunities ”, tirana, 17 january 2013. * * * dear mr. chairman, dear colleagues, ladies and gentlemen, it is a great pleasure for me to participate in this symposium. the rapidly evolving economic landscape of the past few years poses to policy - makers a demanding set of challenges and opportunities. i am sure that the honest and productive exchange of ideas will facilitate a deeper understanding of the problems we are facing and will allow us to design more appropriate strategies for overcoming them. introduction our topics of discussion today focus on the performance and prospects of china and europe, the two economic regions which probably are at the opposite ends of the spectrum of contagion from the global crisis. while china has remained largely unaffected, europe has suffered significantly. the crisis exposed fundamental structural and institutional weaknesses in the eurozone and the eu. in my short address, i will concentrate on the current state of europe ’ s economic and financial situation. it would be almost an understatement to define the past, the current and the expected developments in the europe, as difficult and short - term. the so - called “ great depression ” tested the eurozone and the european economy. eu convergence process proved to be incomplete, from economic and institutional point of view. from a longer term perspective, the process of globalization and the adverse demographic trends have challenged the sustainability of the economic and social systems of the eu. in spite of these problems, i remain firmly convinced that europe will continue to be a dynamic and prosperous region in the future. the short term costs of structural reforms will be far outweighed by their targeted long - term gains. a more competitive and integrated europe, underpinned by stronger institutions and governed by more sustainable economic and financial policies, will benefit the whole global economy. the remaining part of my speech will address these points in more detail. europe through the crisis europe has been one of the worst hit regions from the global crisis. the initial impact of the subprime market crash in the us was felt across the european financial sector, with stock markets plummeting and banks facing huge losses on their balance sheets. the resulting decrease in asset prices and the drying up of bank credit, the decline in global trade activity as well as the collapse of business and consumer confidence, were