Role of subordinated debt in market discipline

IMF RESEARCH - This new working paper by the IMF puts the last nail in the coffin regarding the use of mandatory subordinated debt in enhancing market discipline in emerging markets. The Federal Reserve has already rejected the use of sub-debt for US banks earlier this year.

"The Role of Subordinated Debt in Market Discipline - The Case of Emerging Markets"

By Cem Karacadag, Economist in the Financial Systems Surveillance II Division of the IMF's Monetary and Exchange Affairs Department, and

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