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Financial law as indirect climate law
This paper explores the concept of ‘indirect climate law’, focusing on how financial law and sectorspecific regulation contribute to climate objectives in anticipation of direct climate legislation. Against the backdrop of the European Climate...
This paper examines frictions among Common Equity Tier 1 (CET1), Additional Tier 1 (AT1), and Tier 2 instruments within the European Union prudential and resolution framework across four stages: (i) distributions under going-concern conditions, (on CET1 and AT1 instruments: out of available distributable items (ADI) limited by the maximum distributable amount (MDA)), (ii) contractual principal loss-absorption mechanism (PLAM) in AT1 instruments, and (iii) statutory loss-allocation at the point of non-viability (PONV), and (iv) in resolution or insolvency proceedings. The analysis identifies material divergences in the regulatory and supervisory treatment of AT1 and Tier 2 instruments across these stages and proposes targeted amendments to support a coordinated international approach, thereby promoting transparency and consistency in the capital framework.
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This paper is part of the Banking Supervision Policy Working Paper Series in the context of the SSM-EUI partnership on SSM Banking Supervision Learning Services. Read more.