Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278283 
Year of Publication: 
2022
Series/Report no.: 
ECB Working Paper No. 2758
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We assess the impact on bank bond holdings of regulatory changes in the requirements for bail-inable liabilities designed to facilitate an orderly resolution process, while reducing taxpayers-funded bailouts. Analyzing confidential data on securities holdings by banks, we document that the introduction of the minimum requirements for eligible liabilities (MREL) induced banks to increase their holdings of eligible bank bonds, especially if issued by other banks. The requirement for own funds and eligible liabilities (TLAC) instead raised the incentives for non-issuing banks to invest in eligible subordinated debt issued by global systemically important banks. Finally, we find evidence of increased within-country bank interconnectedness and concentration risks in the banking sector that might potentially introduce frictions in bail-in implementations.
Subjects: 
bank bonds
regulatory changes
bail-inable debt
MREL
TLAC
JEL: 
G01
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-5470-9
Document Type: 
Working Paper

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