Staff Discussion Notes

Contingent Capital: Economic Rationale and Design Features

By Ceyla Pazarbasioglu, Jianping Zhou, Vanessa Le Lesle, Michael Moore

January 25, 2011

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Format: Chicago

Ceyla Pazarbasioglu, Jianping Zhou, Vanessa Le Lesle, and Michael Moore. "Contingent Capital: Economic Rationale and Design Features", Staff Discussion Notes 2011, 001 (2011), accessed December 22, 2024, https://doi.org/10.5089/9781462304141.006

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Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

The causes of the global financial crisis were multi-faceted but revealed still unresolved weaknesses in national and international financial oversight and resolution frameworks. In particular, many governments in the crisis-hit countries had to provide unprecedented levels of support to contain the crisis and protect financial stability. These interventions have not only contributed to a significant increase in sovereign exposures but, in many countries, they have also risked weakening market discipline and worsening moral hazard.

Subject: Banking, Basel III, Capital adequacy requirements, Contingent capital, Contingent convertible capital, Stocks

Keywords: Capital, Capital ratio, Equity capital, SDN, Share price

Publication Details

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