1. For each currency the matching adjustment referred to in Article 77b shall be calculated in accordance with the following principles:
(a) the matching adjustment must be equal to the difference of the following:
(i) the annual effective rate, calculated as the single discount rate that, where applied to the cash flows of the portfolio of insurance or reinsurance obligations, results in a value that is equal to the value in accordance with Article 75 of the portfolio of assigned assets;
(ii) the annual effective rate, calculated as the single discount rate that, where applied to the cash flows of the portfolio of insurance or reinsurance obligations, results in a value that is equal to the value of the best estimate of the portfolio of insurance or reinsurance obligations where the time value of money is taken into account using the basic risk-free interest rate term structure;
(b) the matching adjustment must not include the fundamental spread reflecting the risks retained by the in
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