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Using Subordinated Debt as an Instrument of Market Discipline
Source: Federal Reserve

3.  Analysis of the Key Characteristics of a Subordinated Debt Policy

As discussed in section 1 (see especially table 1), proposals for an SND policy can and do vary widely.  This section analyzes the critical characteristics identified by the study group. At the outset, one should recognize that, although the characteristics are examined in separate sections, many of them are interdependent. For example, a larger SND requirement would allow for more-frequent issuance, as would limiting the SND policy to the very largest banks. Thus, a decision regarding the preferred SND policy will need to resolve several trade-offs.

What institutions should be subject to an SND policy?