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Systemic Risk and Regulation: The Misguided Case of Insurance SIFIs

There is no compelling evidence that any life insurer poses a threat to the financial stability of the United States, and the Section 113 regime is flawed in concept and execution.  The better approach to developing enhanced supervision to mitigate systemic risk is to eschew designation of specific institutions as systemically risky and instead focus on the underlying activities in different sectors that could give rise to systemic risk.

If the United States were to shift towards an activities-based approach for insurers, it might have positive spillover effects globally.

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