Bail-in Securities: Is the Game Worth the Candle?

, ,

Australian retail investors have subscribed large amounts to “bail-in” securities issued by banks and insurers. The complex design of these securities makes it extremely difficult to assess the risks involved and the appropriate compensation for investors bearing such risks. And will they ultimately work to ensure orderly resolution of troubled financial institutions as hoped for? In this FPB, Professor Kevin Davis argues that the regulatory inducement for banks to issue such complex securities warrants reconsideration.

Download the Financial Policy Brief.

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.