This problem will obviously not be negotiated on its own, however, and other less controversial aspects will also be on the table (financial conglomerates and double gearing
of equity, as well as the nature of financial instruments that can be considered common equity tier 1' capital).
describes situations where two institutions use shared capital to protect against risk occurring in separate entities.
In what is known as capital double gearing
, many Japanese insurers own the shares of Japanese banks, while in turn, those banks have invested in the capital base of the insurers.
As for the future impact of state solvency supervision, by 2001 all states in the European Union must enact a directive to eliminate the double gearing
of capital funds in insurance groups.
of equity for financial conglomerates.