From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions
Business & Finance, Economics, Money & Monetary Policy, Macroeconomics
| Author: | Virginia Rutledge, Michael Moore, Marc Dobler, Wouter Bossu, Nadège Jassaud, Jian-Ping Ms. Zhou | ISBN: | 9781475598247 |
| Publisher: | INTERNATIONAL MONETARY FUND | Publication: | April 24, 2012 |
| Imprint: | INTERNATIONAL MONETARY FUND | Language: | English |
| Author: | Virginia Rutledge, Michael Moore, Marc Dobler, Wouter Bossu, Nadège Jassaud, Jian-Ping Ms. Zhou |
| ISBN: | 9781475598247 |
| Publisher: | INTERNATIONAL MONETARY FUND |
| Publication: | April 24, 2012 |
| Imprint: | INTERNATIONAL MONETARY FUND |
| Language: | English |
The proposed SDN, prepared by a team of MCM/LEG experts, analyses whether bail-in -- defined as a statutory power to recapitalize a distressed SIFI by converting and/or writing down its unsecured debt -- could be a useful complementary tool to other resolution powers. More specifically, the note studies the effectiveness of bail-in in achieving prompt bank recapitalization at the time of distress, discusses potential risks when a bail-in power is activated, and proposes design features to mitigate these risks.
The proposed SDN, prepared by a team of MCM/LEG experts, analyses whether bail-in -- defined as a statutory power to recapitalize a distressed SIFI by converting and/or writing down its unsecured debt -- could be a useful complementary tool to other resolution powers. More specifically, the note studies the effectiveness of bail-in in achieving prompt bank recapitalization at the time of distress, discusses potential risks when a bail-in power is activated, and proposes design features to mitigate these risks.
