BoC: contingent capital must supplement counter-cyclical capital buffers
A Bank of Canada paper published in August says that despite the benefits of counter-cyclical capital buffers, contingent capital is necessary to provide capital during liquidity crises.
Hajime Tomura, the paper's author, analyses the long run effects of banking on economic growth, business-cycle dynamics of asset prices, asset illiquidity and bank capital requirements in response to productivity shocks and changes in the degree of asymmetric information.
Tomura finds that the counter-cyclical
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