Designing Capital Instruments for Mutual ADIs

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In this FPB written as a submission for the Hammond Review into Reforms for cooperatives, mutuals and member-owned firms Professor Kevin Davis advocates allowing mutual ADIs to issue preference shares to members (and others) to raise external regulatory capital. He also argues that “bail-in” requirements for such securities to meet regulatory capital requirements need to be reconsidered, both in terms of their rationale and, if maintained, their design.

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This FPB was prepared by Professor Kevin Davis, Research Director at the Australian Centre for Financial Studies.

The ACFS Financial Policy Brief series provides independent analysis and commentary on current issues in financial regulation, with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation.

To read more papers in the FPB series, click here.