It is exactly the acknowledgment of this distinction that would help mitigate the alleged “dilemma” of minimizing costs while containing risks. The cost minimization attempted over short-term by the debt managers may create sub-optimal debt structures, which may create stress for issuer by enhancing refinancing risks as was seen during the recent European sovereign debt crisis.
2  BIS central bankers’ speeches  For these reasons, the special resolution mechanism of Dodd-Frank and the enhanced capital requirements called for by that same law should be regarded as complementary rather than as substitutes. Indeed, additional capital requirements would relieve some pressure on the insolvency regime.