kaal:claim:1998455-020

A mandatory contingent capital issuance regime induces institutions to buy their competitors' securities to satisfy regulatory obligations rather than for economic reasons, and the resulting cross holdings among systemically important institutions undermine the ability of contingent capital to limit systemic risk and contagion.

A detrimental result of such a practice could be CCS cross holdings among SIFIs. Cross holdings of CCS by SIFIs could undermine the effectiveness of CCS and its ability to limit systemic risk and contagion.

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), IV.B. Conflicts of Interest, p. 35
https://ssrn.com/abstract=1998455 · source PDF

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455

• under a regime requiring mandatory CCS issuance
• where SIFIs are permitted to purchase each other's CCS

failuresupport: arguedfailure: ccs-cross-holdingsfamily: systemic-risk-transmissionsystemic-riskrisk-and-incentives

• extended_by kaal:claim:2061166-029 Building critical mass in the contingent capital securities market could require banks and other financial ins...

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