UFR change would ‘threaten’ Solvency II political compromise

German policy-makers talk tough in opposition to lowering of discount rate

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Senior industry figures, particularly in Germany, say the Solvency II political balance is under threat

If you focus too much on the economic basis for financial regulation, you can forget how the details often have as much to do with balancing political interests. Arguably the most technical aspects of Solvency II – the matching adjustment (MA), volatility adjustment (VA) and ultimate forward rate (UFR) – are amendments to the directive introduced to appease anxieties specific to national markets.

Broadly speaking, during the 2013 Omnibus II negotiations in the European Parliament, UK

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