|
Information
> Manual 172 > This page
Using Subordinated Debt as
an Instrument of Market Discipline
Source:
Federal Reserve
Introduction
1. Why
a Subordinated Debt Policy?
Why
subordinated debt?
SND
proposals
2. Evidence
on the Potential Market-Discipline Effects of Subordinated Debt
Literature
review
Views
of market participants
New
evidence
Model
specification
Empirical results
Implications for direct
and indirect market discipline
Could
an SND policy be expected to improve market discipline?
3. Analysis
of the Key Characteristics of a Subordinated Debt Policy
What
institutions should be subject to an SND policy?
Size
alone or size plus other criteria?
Banks or bank holding companies?
What
amount of SND should be required?
What
characteristics should the required SND have?
Tradability
Market participants
Maturity
Call and put option
features
Fixed rates, floating
rates, and rate caps
Frequency
of issuance
A
transition period
How
should the requirements be enforced and SND information used?
Examination
and surveillance procedures
Data requirements
The
relation among SND policy, increased disclosure, and an improved Basel
Accord
4.
Conclusion
Appendixes
A. Members
of the Federal Reserve System Study Group on Subordinated Notes and Debentures
B. A Summary of Interviews with Market
Participants
C. Avoiding Subordinated Debt Discipline
D. Macroeconomic Effects of Mandatory Subordinated
Debt Proposals
E. Treatment of Subordinated Debt in Risk-Based
Capital
F. The Argentine Experience with Mandatory
Bank SND
|