Newsletter January 2011: US academics group backs contingent capital

WASHINGTON – The US Shadow Financial Regulatory Committee (SFRC), a group of respected academics specialising in regulatory matters, have strongly backed plans for banks to raise contingent capital (CoCos) as a means of strengthening their defences if they run in to trouble. “A properly structured CoCo requirement could have important incentive benefits that would nicely complement the new higher minimum capital requirements [for banks],” the Committee said in a statement following a two-day meeting in mid-December.