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The training will touch upon the technical framework for contingent capital and bail in debt and the different choices made by the European legislator as compared to other regulators throughout the world. A comparison is made of different bail in regimes in Europe as well, in order to explore the common ground and the differences in the applicable regimes. In addition to the analysis from a legal perspective, an elaborate discussion will be presented about the first market developments in respect of contingent capital and bail in debt, effects on pricing and the different rationale for investors taking positions in contingent capital and bail in debt.

Giuseppe De Martino, Massimo Libertucci, Mario Marangoni, Mario Quagliariello, 30 October 2010

Contingent capital requirements may reduce the problems of low-quality bank capital and excessively leveraged institutions, but they also risk being too complex. This column aims to strike an appropriate balance by presenting a proposal based on both macroeconomic and bank-level triggers for debt-to-equity conversion. It assesses how such a rule would have performed in identifying stressed banks in recent years.

CEPR Policy Research