EU-legislation lacks ample protection from a new economic crisis

VUB-PhD study points to potential dangers

For her doctorate “A Critical Legal Study of the Ideology behind Solvency II”, VUB-researcher Kristina Loguinova carried out research into the renewed EU-legislation that was introduced since the major economic crisis in Europe (2007-2009). Her foremost conclusion? Despite these effort, in actual fact very little has changed. A large group of investors today still play the same role that lead to the economic crisis at the time.

Insurance companies are the principal institutional investors in the EU. They have to abide by the European ‘Solvency II’ guidelines, in order to guarantee economic stability. At this time however, Solvency II is a “dangerous instrument” according to the researcher of VUB PhD student Kristina Loguinova. Because these guidelines continue to build on the ‘Basel II’ guidelines that were jointly responsible for the latest financial and economic crisis. At the basis of Basel II lies the entire free market philosophy.

Worldwide protest movements such as Occupy Wall Street have made abundantly clear that major changes in our financial, economic and legal systems are crucial in the near future. Since, so posits Kristina Loguinova, “large swaths of people no longer believe the system still serves average individuals”. A conviction that seems to only grow stronger because of existing “income inequality”.

Therefore the researcher proposes a redesign of the legal framework: “To reduce the chance of a new global economic crisis, is it advisable to reassess Solvency II. Further, rules could be implemented that require insurance companies to invest in line with the UN Sustainability Goals or the sustainability guidelines of the European Commission. This could definitely benefit the EU economy,” according to Kristina Loguinova.

Kristina Loguinova remains connected to VUB after her PhD promotion as a guest professor in the course ‘Money and Law’ . Aside from that she is active as a consultant at Ayming and she is one of the finalists in the Flemish PhD Cup.

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