Current research projects


Liquidity and stress testing requirements in Asset Management:

  • Assessment of the Financial Stability Board’s policy recommendations to address structural vulnerabilities in the asset management industry.

Liquidity regulatory requirements in banking:

  • What is market liquidity?
  • Is the Basel III approach correct?
  • Unintended consequences of the current regulatory framework.

Regulation of derivatives:

  • Dodd–Frank (titles VII and VIII): more financial stability or moral hazard?
  • American regulation of OTC derivative markets
  • European regulation on speculation in the OTC derivative markets (ESMA)

Researchers interested to collaborate, should contact us at:



FRC Position Paper 1

FRC’s Are CoCo Bonds Suitable as Core Capital Instruments?
Kevin Dowd


Basel III introduced significant innovations in bank regulation. One of them is the minimum required leverage ratio. To help banks implementing the new measure , Basel III created two different core capital measures: Common Equity Tier 1 (CET1) and Additional Tier 1 (AT1). Since raising capital for CET1 is expensive, other instruments are used to build up AT1 in case of need, like for example Contingent Convertible (CoCo), which can convert to equity or written-down when a bank  is under stress. In this paper we show that CoCos are not suitable as regulatory core capital instruments. Problems of timing, incentives, systemic risk, regulatory discretion and regulatory capture make CoCos unreliable as core capital instruments (unlike other hybrid instruments), and regulators should not treat them as such.

Download the paper here.


FRC Position Paper 2

Socially Useless? The crucial contribution of finance to economic life
Philipp Booth, Diego Zuluaga


This paper examines the social functions of finance and consider whether the financial sector is intrinsically socially useful. The financial services sector has been under attack in recent years, especially since the financial crisis. However, the bias against finance dates back to centuries ago. These attacks have come in various forms, mainly criticizing its size. The reality looks different: the financial sector add value, helps in risk management, reduces transaction costs and enables the coordination of information exchange in the economy.

Download here the prototype of the first issue.