The FSB’s resolution standards for global systemically-important banks (GSIBs) and, by inference, others have since 2011 called for issuance of “bail-in” instruments that have come to be called contingent-convertible securities (CoCos).  Although well over a half a trillion dollars of these instruments have been issued, the FSB is fearful that actual conversion of these hybrid instruments into funding that stabilizes a troubled bank or promotes orderly, market-funded resolution is uncertain, especially if CoCo holders come under an array of different national jurisdictions (as is often the case).  The interplay between bail-in obligations and broader internal and external TLAC requirements also complicates the manner in which bail-in instruments that are not simple long-term debt or equity could be deployed as a resolvability buffer.

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