Measures Aimed at Enhancing the Loss Absorbency of Regulatory Capital at the Point of Non Viability
by Marianne Ojo of the University of Bremen & Oxford Brookes University
Abstract: The Basel Committee's recent consultative document on the "Proposal to Ensure the Loss Absorbency of Regulatory Capital at the Point of Non Viability" sets out a proposal aimed at "enhancing the entry criteria of regulatory capital to ensure that all regulatory capital instruments issued by banks are capable of absorbing losses in the event that a bank is unable to support itself in the private market."
JEL Classification: D53, K2, E58, G01.
Keywords: capital, insolvency, financial crises, moral hazard, Basel III, Investor Compensation Schemes Directive, bail outs, equity, liquidity.
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