Contingent capital

Contingent capital

Government bailouts during the recent financial crisis were controversial because of the burden on taxpayers and because even if taxpayers eventually get their money back, such bailouts can undermine banks' incentives not to take excessive risk in the future. New regulatory reforms aim to avoid...

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Veröffentlicht in:Business Review - Federal Reserve Bank of Philadelphia 2012-06, p.11
1. Verfasser: Leitner, Yaron
Format: Artikel
Sprache:eng
Schlagworte:
Analysis
Bailouts
Bank capital
Banking industry
Capital requirements
Economic aspects
Laws, regulations and rules
Regulatory reform
Studies
Value (Economics)
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Beschreibung
Zusammenfassung:Government bailouts during the recent financial crisis were controversial because of the burden on taxpayers and because even if taxpayers eventually get their money back, such bailouts can undermine banks' incentives not to take excessive risk in the future. New regulatory reforms aim to avoid such crises in the future. One proposal is to require banks to hold "contingent capital." In this article, Yaron Leitner explains what contingent capital is and discusses some of the arguments in favor of it. He also discusses potential implementation problems and looks at some of the alternatives. [PUBLICATION ABSTRACT]
ISSN:0007-7011
2163-4440