One often hears from Brexit supporters that too many regulations come from Brussels, that it would be much better if we could regulate ourselves. At least when it comes to finance, that argument just does not hold water.
It may fly in the face of conventional wisdom, but the UK is often much more keen on financial regulations than the rest of Europe. And it is certainly much more interested in state-of-the-art — experimental — regulations.
Case in point — Solvency II.
Solvency II, besides significantly increasing the costs of providing insurance, also creates systemic risk where none existed before. It is financial policymaking at its worst.
As we discussed here, here, here and here.
And Solvency II is a British intervention, pushed onto reluctant Europe, even though it is quite often, and very inaccurately, presented here as Brussels overreach.
We have certainly been very good at exporting bad regulatory ideas, like light touch regulation and the separation of supervision from central banking.
More recently, the UK leads on experimental and costly macro prudential policies, and is the European country that wants the highest levels of bank capital.
If we leave, our financial system will be more and worse regulated than if we remain .