Another structured instrument I would like to mention are contingent convertibles (CoCos), which could complement banks’ various refinancing instruments. As it is a fairly new instrument with a lot of different arrangements, it is difficult to estimate the exact scope of this market segment. CoCos are a useful instrument to increase the capital base in times of stress.
Under the quantitative easing policy regime, transparency in regard to policy instruments was extremely high, as was expressed by the above-mentioned three conditions. Moreover, the assumption of the constant policy interest rate in providing forecast could be easily justified, as long as the inflation rate was expected to remain below zero. 12.