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The economic impact of these two structures would be very similar. 6  BIS central bankers’ speeches  This contractual automaticity would provide a shot in the arm to incentives and thus market discipline. First, for the incentives of investors. Knowing that a trigger might be close to being pulled, and their claims converted, CoCo investors are likely to sit up and take notice. If conversion takes place below the prevailing market price, the incentives among existing shareholders are similarly sensitised. Early signs of deteriorating profits or sentiment are likely to result in greater investor activism. Such activism was absent in the run-up to the crisis, in part because there was no early morning wake-up call for investors. Second, for the incentives of management. If investors are grumpy about their early morning wake-up call, management of the bank are likely to hear their hoarse protests. And anticipating these protests, management are less likely to sail close to the wind or at least will be quicker to tack when fearing a squall. Management, too, would be provided with incentives to remain shipshape. Third, for the incentives of regulators. In the depths of crisis, as recent experience has shown, the temptation to forbear or bail-out is very strong. It is no surprise that the authorities often opt for the greater certainty of bail-out ex post, whatever their preferences ex ante. This policy time-consistency problem lies at the heart of the current regulatory debate.