# kaal:claim:1998455-020

**Claim.** 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.

**Type.** failure  **Support.** argued

**Holds when.**

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

**Source quote.**

> 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.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), IV.B. Conflicts of Interest, page 35

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

**Verify.** sha256 of source PDF `1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202012%20-%20Initial%20Reflections%20on%20the%20Possible%20Application%20of%20Contingent%20Capital%20in%20Corporate%20Governance.pdf

**Failure mode.** ccs-cross-holdings  (family: systemic-risk-transmission)

**Topics.** systemic-risk, risk-and-incentives

**Keywords.** cross-holdings, mandatory-issuance, systemic-risk, contagion, conflicts-of-interest

**Related claims.**

- extended_by: https://wulfkaal.github.io/claims/2061166-029

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.