Market measures provide both fewer false positives and more reliable advance warnings of future banking distress. Taken together, then, market-based solvency metrics perform creditably against first principles: they appear to offer the potential for simple, timely and robust control of a complex financial web. Contractual prompt corrective action But how should these market-based metrics be put to use in the design of a regulatory framework? Market warnings are useless unless they are acted on, either by the market itself or by regulators. It is not too difficult to devise a reconfiguration of banks’ capital structure that would bake-in the benefits of simplicity, robustness and timeliness. This would involve a cocktail of revised regulatory capital standards fortified by market discipline. It might work as follows. Alongside equity, banks would be required to issue a set of contingent convertible instruments – so-called “CoCos”. These instruments have attracted quite a bit of attention recently among academics, policymakers and bankers, though there remains uncertainty about their design.12 In particular, consider CoCos with the following possible design characteristics.   Triggers are based on market-based measures of solvency, as in Charts 6–8.   These triggers are graduated, stretching up banks’ capital structure.13    On triggering, these claims convert from debt into equity. Although novel in some respects, CoCos with these characteristics would be simple to understand. They would be easy to monitor in real time by regulators and investors. And they would alter potentially quite radically incentives, and thus market dynamics, ahead of banking stress becoming too acute.

Zeti Akhtar Aziz: Nurturing young talent in Malaysia Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Kijang Emas Scholarship Award Ceremony for High Achievers, Kuala Lumpur, 6 May 2014. *  *  *  While the global economy continues to face uncertainties and significant challenges, the Malaysian economy has every potential to remain on a steady growth trajectory and move up the value chain. This is however only achievable if we can nurture the required talents. Talent development strategies and implementation is therefore one of the key priorities of the nation. We need to invest in our talent pipeline The Kijang Emas Scholarship Award is an eminent scholarship award reflecting the Bank’s commitment in creating a sustainable talent pool for the nation. The Kijang Emas scholarship is distinct from the Kijang scholarship whereby the recipients are given the freedom to pursue any field of study at top-notch universities in any country of their choice. The Bank also does not impose any bond on the recipient except that they return, contribute and take part in the progress and development of our beloved nation. To date, 42 high potential talent have been awarded the Kijang Emas scholarship. The recipients are currently pursuing their studies in diverse field of studies including Medicine, Dentistry, Genetics, Biochemistry, Dietetics, Physics, Engineering, Law, Psychology and Architecture in top universities around the world such as M.I.T., University of Pennsylvania and the University of Cambridge.