In a Financial Times column entitled “how to save banks without using taxpayers’ money” Professors Wolff and Vermaelen describe a financial instrument called Contingent Convertibles (also known as CoCo bonds). In the recent crisis, these could have helped distressed institutions to convert debt to equity, reducing the need for capital injections from the state.
And, if so, how?” The FOMC’s primary monetary policy tool is its target range for the federal funds rate. In December 2008, the FOMC cut that target to just above zero in response to financial turmoil and deteriorating economic conditions.