Capital Study Report: Use of Market Discipline
198 Pages Posted: 7 Nov 2015
Date Written: January 10, 2014
This report by Hal S. Scott and the staff of the Committee on Capital Markets Regulation examines a balanced approach to capital regulation that enhances private market discipline while strengthening the complementary role of government-imposed capital requirements. A regulatory approach that recognizes the dual roles of government and the private market in setting appropriate capital levels at financial institutions will result in a stronger and safer financial system than can be achieved through public regulation alone. The approaches outlined in this paper will achieve the desired goal of a more robust financial system.
Keywords: bank regulation, contingent claims, CoCo bonds, capital requirements, leverage, systemic risk
JEL Classification: G21, G28, G20, G18, G13
Suggested Citation: Suggested Citation