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Journal Article
Why bail-in? And how!
All men are created equal, but all liabilities are not. Some liabilities are more equal than others. These "financial liabilities" are products of financial firms. These products shift risk (insurance or derivatives) or provide liquidity (bank deposits or repurchase agreements). Since these liabilities have an independent value as products, they are worth more than their net present value. The value of a financial firm, then, depends on its liability structure. These special liabilities therefore affect insolvency law. Most financial firms are governed by special insolvency law; those ...