8  BIS central bankers’ speeches  while model error cannot. Put differently, with market-based CoCos the cost of Type I errors may be relatively modest for end-investors. A second key practical issue is whether it is plausible to imagine an investor base for CoCos emerging. Recent signs have been encouraging. Two major international banks have issued CoCos totalling around $ since the start of the year. Credit Suisse recently issued a $ CoCo in a public auction, which was reportedly 11-times over-subscribed. Some market commentary suggests the CoCo market could grow to around $ trillion over the next few years.20 Despite that progress, investor demand for CoCos remains uncertain. Tellingly, none of the CoCos issued so far have had market-based triggers, none have a graduated ladder of triggers and, in my view, none extend very far up banks’ capital structure. In short, the case for a CDE capital structure is, at present, unproven. But there may be simple, evolutionary ways to catalyse market demand to achieve this capital structure. Perhaps the simplest way to do so would be to require banks to make discretionary distributions to staff and shareholders in CoCos. In this way, an investor base for CoCos would emerge organically and grow in line with banks’ profits. As well as catalysing the CoCo market, this distributive approach would have two further benefits. First, it would boost the resilience of banks by keeping revenues in the business and augmenting banks’ capital base.
The Riksbank has chosen to publish minutes of Executive Board meetings after an interval of 6–8 weeks; the minutes are to reflect the discussion and indicate how the members voted. The clearly independent status that has now been assigned to the Riksbank has much to do with this choice. The minutes make it easier for policy evaluators to follow the formation of monetary policy and assess the actions of Board members. This is a democratic interest. Moreover, the fact that the voting will be published probably increases the members’ motivation to form a personal opinion about the difficult matters that have to be considered. I also believe that access to the minutes can help people to understand the choices that have to be made in the formulation of monetary policy and demystify what the Riksbank is doing. It is arguments of this type that made my British colleague Mervyn King declare, with reference to the work of the Bank of England’s Monetary Policy Committee, that ‘Divided we stand, united we fall’. I want to emphasise that these matters are by no means simple. It seems to me that a clear analytical framework, combined with a high degree of transparency, has provided a good foundation for Swedish monetary policy in recent years. But with an Executive Board consisting of six members, each of whom is in a position to voice an opinion on monetary policy, it is probable that from time to time the Riksbank will be criticised for being indistinct.