From a potentially very long list, we conclude by highlighting some of the areas where we think further research and practical exploration might be useful in the future debate on regulatory reform.25  (a) Optimal Levels of Capital: One of the most animated, on-going areas of regulatory debate is whether capital standards have been appropriately calibrated. Relative to the pre-crisis LEI study, current levels of capital requirements in most countries are below that calibration. The single most important reason for that is because the LEI study did not take into account the potential impact of non-equity sources of capital, specifically TLAC, in reducing the impact and probability of crisis. The key question, then, is whether these instruments prove to be as loss-absorbing in future situations of stress where bail-in becomes necessary. This issue is particularly relevant when it involves systemically-important institutions or sets of institution, when the costs of bailing-in (and bailing-out) are large and lumpy. At this early stage, the jury must still be out. On the one hand, historical evidence on bailing-in different types of notionally loss-absorbing bank liabilities in situations of systemic stress has not been encouraging, reflecting the acuteness of the time-consistency problem facing the authorities in these cases. On the other, new statutory resolution arrangements are much stronger than ever previously, and statutory TLAC requirements are now prescribed in advance. This means next time could plausibly be different. Given its importance to the overall capital calibration, this issue deserves further empirical and theoretical consideration.

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