It is also fair to say that market disciplines are more likely to be effective where the supervisory requirements applied to banks are kept to a minimum. I say this for two reasons. BIS Review /1997  - 11 -  First, the greater the supervisory requirements, the more likely it is that the market will perceive that the government is underwriting individual banks.
The key tasks facing supervisors now are to observe the market very closely and to press ahead with efforts to improve the legal framework for coco bonds. Once these tasks have been accomplished, coco bonds can be a useful addition to banks’ capital structure. By helping to strengthen the capital base, they will make an added contribution to enhancing banks’ resilience to future crises.