# kaal:claim:1998455-037

**Claim.** Combining the existing prioritization of bailouts for systemically important institutions with central bank purchases of their contingent capital in a given jurisdiction would further incentivize those institutions to adopt similar risk profiles and correlate their risks.

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

**Holds when.**

- in a jurisdiction where both bailout prioritization and central bank CCS purchases occur

**Source quote.**

> Combining bailout prioritization with central bank CCS purchases in a given jurisdiction could further incentivize SIFIs to adopt similar risk profiles and corre- late risks.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), VII.D. Additional Considerations, page 49

**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.** correlated-risk-from-central-bank-purchases  (family: systemic-risk-transmission)

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

**Keywords.** central-banks, correlated-risk, bailouts, systemic-risk, failure-modes

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