Research articles for the 2019-03-29
Absolute Momentum, Sustainable Withdrawal Rates and Glidepath Investing in US Retirement Portfolios from 1925
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A significant part of the development in pension provision in many countries is the emergence of ‘Target Date Funds’ or TDFs. In this paper we examine the proposition of de-risking through life and the guidance offered by TDFs in the decumulation phase following retirement. We investigate the withdrawal experience associated with Glidepath Investing in the US since 1925 for conventional bond-equity portfolios. We find one very powerful conclusion: that smoothing the returns on individual assets by simple absolute momentum or trend following techniques is a potent tool to enhance withdrawal rates, often by as much as 50% per annum! And, perhaps of even greater social relevance is that it removes the ‘left-tail’ of unfortunate withdrawal rate experiences, i.e. the bad luck of a poor sequence of returns early in decumulation. We show that diversifying assets over time by switching between an asset and cash in a systematic way is potentially more important for the retirement income experience than diversifying one’s portfolio across asset classes. We also show that Glidepath investing is only sensible within a few years of the target date. This finding provides succour to enthusiasts for target date investing in the face of the growing hostility in the literature.
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A significant part of the development in pension provision in many countries is the emergence of ‘Target Date Funds’ or TDFs. In this paper we examine the proposition of de-risking through life and the guidance offered by TDFs in the decumulation phase following retirement. We investigate the withdrawal experience associated with Glidepath Investing in the US since 1925 for conventional bond-equity portfolios. We find one very powerful conclusion: that smoothing the returns on individual assets by simple absolute momentum or trend following techniques is a potent tool to enhance withdrawal rates, often by as much as 50% per annum! And, perhaps of even greater social relevance is that it removes the ‘left-tail’ of unfortunate withdrawal rate experiences, i.e. the bad luck of a poor sequence of returns early in decumulation. We show that diversifying assets over time by switching between an asset and cash in a systematic way is potentially more important for the retirement income experience than diversifying one’s portfolio across asset classes. We also show that Glidepath investing is only sensible within a few years of the target date. This finding provides succour to enthusiasts for target date investing in the face of the growing hostility in the literature.
Adapting Lending Policies Against a Background of Negative Interest Rates
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Since June 2014 the European Central Bank (ECB) has placed its deposit facility interest rate (DFR) at negative levels. Against this background, the question arises as to whether maintaining negative interest rates over a prolonged period can adversely affect credit institutions’ net interest income and, ultimately, the supply of credit. Euro area banks’ responses to the Bank Lending Survey (BLS) enable the banks to be classified into two groups, depending on whether their net interest income has been impaired or not by the negative rates (“affected†versus “unaffected†banks). The analysis in this article shows that the affected banks are generally not as well capitalised. This circumstance might have hindered these banks from taking on fresh risks under their lending policy in order to attempt to offset the adverse effect of the negative rates on their unit lending margins. Indeed, the banks most affected by negative interest rates tightened the terms and conditions on their loans to a greater extent than those unaffected, to optimise their risk-weighted assets and, therefore, their capital ratios. Lastly, the article shows there are no differences between both groups of banks as regards the total credit offered and that the credit supply has been adapted via loan terms and conditions and not through the total amount offered. This result suggests that the current level of the DFR (-0.4%) is not causing a contraction in the volume of credit supplied by the banks affected.
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Since June 2014 the European Central Bank (ECB) has placed its deposit facility interest rate (DFR) at negative levels. Against this background, the question arises as to whether maintaining negative interest rates over a prolonged period can adversely affect credit institutions’ net interest income and, ultimately, the supply of credit. Euro area banks’ responses to the Bank Lending Survey (BLS) enable the banks to be classified into two groups, depending on whether their net interest income has been impaired or not by the negative rates (“affected†versus “unaffected†banks). The analysis in this article shows that the affected banks are generally not as well capitalised. This circumstance might have hindered these banks from taking on fresh risks under their lending policy in order to attempt to offset the adverse effect of the negative rates on their unit lending margins. Indeed, the banks most affected by negative interest rates tightened the terms and conditions on their loans to a greater extent than those unaffected, to optimise their risk-weighted assets and, therefore, their capital ratios. Lastly, the article shows there are no differences between both groups of banks as regards the total credit offered and that the credit supply has been adapted via loan terms and conditions and not through the total amount offered. This result suggests that the current level of the DFR (-0.4%) is not causing a contraction in the volume of credit supplied by the banks affected.
An Event Study of the US Airways-American Airlines Merger
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The recent merger between US Airways and American Airlines was approved by federal and state antitrust authorities, after the merging parties agreed to divest slots and gates at certain “constrained†airports to low cost carriers. By analyzing the stock-market returns of rival airlines, we find some evidence that stock market investors anticipated anticompetitive effects from this merger. The economics literature offers many reasons why such stock-market event studies should not be used to infer competitive effects from mergers. For example, abnormal returns for rivals might arise for reasons unrelated to competitive harms, such as when a merger changes expectations that one or more rivals will be “in play†(i.e., a potential future acquisition target). However, we argue that, for certain cases and conditions, event studies can inform a competition analysis, and that the US Airways â€" American merger might well be one such case.
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The recent merger between US Airways and American Airlines was approved by federal and state antitrust authorities, after the merging parties agreed to divest slots and gates at certain “constrained†airports to low cost carriers. By analyzing the stock-market returns of rival airlines, we find some evidence that stock market investors anticipated anticompetitive effects from this merger. The economics literature offers many reasons why such stock-market event studies should not be used to infer competitive effects from mergers. For example, abnormal returns for rivals might arise for reasons unrelated to competitive harms, such as when a merger changes expectations that one or more rivals will be “in play†(i.e., a potential future acquisition target). However, we argue that, for certain cases and conditions, event studies can inform a competition analysis, and that the US Airways â€" American merger might well be one such case.
Asymmetric Volatility in Cryptocurrencies
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This article analyzes asymmetric volatility effects for the 20 largest cryptocurrencies and reports a very different asymmetry compared to equity markets: positive shocks increase the volatility by more than negative shocks. We explain this atypical effect for financial assets with trading activity of uninformed noise traders for positive shocks and trading activity of informed traders for negative shocks. The findings are consistent with "fear of missing out'' (FOMO) of uninformed investors and the existence of pump and dump schemes
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This article analyzes asymmetric volatility effects for the 20 largest cryptocurrencies and reports a very different asymmetry compared to equity markets: positive shocks increase the volatility by more than negative shocks. We explain this atypical effect for financial assets with trading activity of uninformed noise traders for positive shocks and trading activity of informed traders for negative shocks. The findings are consistent with "fear of missing out'' (FOMO) of uninformed investors and the existence of pump and dump schemes
Bank Information Sharing and Liquidity Risk
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We propose a novel rationale for the existence of bank information sharing schemes. Banks may voluntarily disclose borrowers' credit history to maintain asset market liquidity. By sharing such information, banks mitigate adverse selection when selling their loans in secondary markets. This reduces the cost of asset liquidation in case of liquidity shocks. Information sharing arises endogenously when the liquidity benefit dominates the cost of losing market power in the primary loan market competition. We show banks having incentives to truthfully disclose borrowers' credit history, even if such information is non-verifiable. We also provide a rationale for promoting public credit registries.
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We propose a novel rationale for the existence of bank information sharing schemes. Banks may voluntarily disclose borrowers' credit history to maintain asset market liquidity. By sharing such information, banks mitigate adverse selection when selling their loans in secondary markets. This reduces the cost of asset liquidation in case of liquidity shocks. Information sharing arises endogenously when the liquidity benefit dominates the cost of losing market power in the primary loan market competition. We show banks having incentives to truthfully disclose borrowers' credit history, even if such information is non-verifiable. We also provide a rationale for promoting public credit registries.
Banks As Patient Lenders: Evidence from a Tax Reform
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We study how a greater reliance on deposits affects bank lending policies. For identification, we exploit a tax reform in Italy that induced households to substitute bank bonds with deposits. We show that the reform led to larger increases (decreases) in term deposits (bonds) in areas where households held more bonds before the reform. We then find that banks with larger increases in deposits did not change their overall credit supply, but increased credit-lines and the maturity of term-loans. These results are consistent with key theories on the role of deposits as a discipline device and of banks as liquidity providers.
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We study how a greater reliance on deposits affects bank lending policies. For identification, we exploit a tax reform in Italy that induced households to substitute bank bonds with deposits. We show that the reform led to larger increases (decreases) in term deposits (bonds) in areas where households held more bonds before the reform. We then find that banks with larger increases in deposits did not change their overall credit supply, but increased credit-lines and the maturity of term-loans. These results are consistent with key theories on the role of deposits as a discipline device and of banks as liquidity providers.
Coвременные Ñ‚ÐµÑ‡ÐµÐ½Ð¸Ñ Ð² теориÑÑ… ÐкономичеÑких измерений: анализ и макроÑкономичеÑкие поÑледÑÑ‚Ð²Ð¸Ñ (Modern Developments within the Fields of Economic Measurements: Analysis and Macroeconomic Implications)
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Russian Abstract: Ð' Ñтой главе, напиÑанной Ð´Ð»Ñ Ð¿Ð¾Ð´Ð³Ð¾Ñ‚Ð°Ð²Ð»Ð¸Ð²Ð°ÐµÐ¼Ð¾Ð¹ книги по проблемам политики ÑкономичеÑкого развитиÑ, подчеркиваетÑÑ Ñ€Ð¾Ð»ÑŒ, которую Ñовременные теории в облаÑти ÑкономичеÑких измерений (в чаÑтноÑти, триада ПрофеÑÑиональной ÑтоимоÑтной оценки (ПСО), ИнвеÑтиционно-финанÑовой оценки (ИФО) и Оценки ÑффективноÑти инвеÑтиционных проектов (ОÐИП)) могут Ñыграть роль в разрешении Ñовременных противоречий ÑкономичеÑкого развитиÑ.УтверждаетÑÑ, что Ñовременные Ð¿Ñ€Ð¸Ð»Ð¾Ð¶ÐµÐ½Ð¸Ñ Ð½ÐµÐ¾ÐºÐ»Ð°ÑÑичеÑкой теории оценки, такие как CAPM и другие техничеÑкие ÑредÑтва в наборе инÑтрументов ИФО, когда они иÑпользуютÑÑ "вне контекÑта" Ð´Ð»Ñ Ð¾Ñ†ÐµÐ½ÐºÐ¸ реальных, а не ликвидных финанÑовых активов, приводÑÑ‚ к ощутимым иÑкажениÑм цен и деÑтабилизации рынков. Различного вида процикличноÑти, маÑштаб и механика которых , оÑобенно Ñ Ð¿Ñ€Ð¸Ð²Ñзкой к рынку недвижимоÑти, анализируютÑÑ Ð² предложенном материале -- на оÑнове Ñовременных альтернативных теоретичеÑких возрений, оÑнованных на понÑтиÑÑ… теории фундаментальной ÑтоимоÑти и Ð¿Ñ€Ð¾ÐµÐºÑ‚Ð¸Ñ€Ð¾Ð²Ð°Ð½Ð¸Ñ Ð¼ÐµÑ…Ð°Ð½Ð¸Ð·Ð¼Ð¾Ð² Ñделок, Ð²ÐºÐ»ÑŽÑ‡Ð°Ñ Ð¢Ñ€Ð°Ð½Ð·Ð°ÐºÑ†Ð¸Ð¾Ð½Ð½Ñ‹Ð¹ подход к ценообразованию активов (TAPA).Мы даем обзор предмета, чтобы показать, наÑколько Ñовременные работы по ÐкономичеÑким измерениÑм актуальны Ð´Ð»Ñ Ð²Ð¾Ð¿Ñ€Ð¾Ñов ÑкономичеÑкого развитиÑ, и иллюÑтрируем макроÑкономичеÑки уÑтойчивые ÑпоÑобы переориентации аналитичеÑкого Ð²Ð¸Ð´ÐµÐ½Ð¸Ñ Ð¾Ñ†ÐµÐ½ÐºÐ¸ реальных активов в каждой из выделенных облаÑтей в континууме ÐкономичеÑких измерений. English Abstract: This chapter written for an upcoming book on Economic development policy challenges highlights a role that modern theories in the field of Economic Measurements (in particular, the Professional Valuation (PV), the Investment-Financial Valuation (IFV) and the Assessment of Efficiency of Investment projects (AEIP) triad) could play in resolving the modern contradictions of Economic development. It is claimed that the modern neoclassical valuation theory applications, such as CAPM and other techinques within the IFV toolkit, when put to out-of-context uses to value real, as opposed to liquid financial, assets result in tangible pricing distortions and distabilizing market procyclicalities, the extent and mechanics of which are analyzed, especially with reference to the property market, on the basis of modern alternative theoretical pathways reliant on the notion of fundamental value and transaction mechanism design theories, including the Transactional Asset Pricing Approach (TAPA).We provide an overview of the subject to show how the modern work on Economic Measurements is relevant to the issues of Economic development and illustrate macro-economically sustainable ways for refocusing the anaytical pre-vision for valuation of real assets for each of the fields within the Economic Measurement traid. This work has been conducted under the sponsorship of the RNF grant 18-18-0048.
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Russian Abstract: Ð' Ñтой главе, напиÑанной Ð´Ð»Ñ Ð¿Ð¾Ð´Ð³Ð¾Ñ‚Ð°Ð²Ð»Ð¸Ð²Ð°ÐµÐ¼Ð¾Ð¹ книги по проблемам политики ÑкономичеÑкого развитиÑ, подчеркиваетÑÑ Ñ€Ð¾Ð»ÑŒ, которую Ñовременные теории в облаÑти ÑкономичеÑких измерений (в чаÑтноÑти, триада ПрофеÑÑиональной ÑтоимоÑтной оценки (ПСО), ИнвеÑтиционно-финанÑовой оценки (ИФО) и Оценки ÑффективноÑти инвеÑтиционных проектов (ОÐИП)) могут Ñыграть роль в разрешении Ñовременных противоречий ÑкономичеÑкого развитиÑ.УтверждаетÑÑ, что Ñовременные Ð¿Ñ€Ð¸Ð»Ð¾Ð¶ÐµÐ½Ð¸Ñ Ð½ÐµÐ¾ÐºÐ»Ð°ÑÑичеÑкой теории оценки, такие как CAPM и другие техничеÑкие ÑредÑтва в наборе инÑтрументов ИФО, когда они иÑпользуютÑÑ "вне контекÑта" Ð´Ð»Ñ Ð¾Ñ†ÐµÐ½ÐºÐ¸ реальных, а не ликвидных финанÑовых активов, приводÑÑ‚ к ощутимым иÑкажениÑм цен и деÑтабилизации рынков. Различного вида процикличноÑти, маÑштаб и механика которых , оÑобенно Ñ Ð¿Ñ€Ð¸Ð²Ñзкой к рынку недвижимоÑти, анализируютÑÑ Ð² предложенном материале -- на оÑнове Ñовременных альтернативных теоретичеÑких возрений, оÑнованных на понÑтиÑÑ… теории фундаментальной ÑтоимоÑти и Ð¿Ñ€Ð¾ÐµÐºÑ‚Ð¸Ñ€Ð¾Ð²Ð°Ð½Ð¸Ñ Ð¼ÐµÑ…Ð°Ð½Ð¸Ð·Ð¼Ð¾Ð² Ñделок, Ð²ÐºÐ»ÑŽÑ‡Ð°Ñ Ð¢Ñ€Ð°Ð½Ð·Ð°ÐºÑ†Ð¸Ð¾Ð½Ð½Ñ‹Ð¹ подход к ценообразованию активов (TAPA).Мы даем обзор предмета, чтобы показать, наÑколько Ñовременные работы по ÐкономичеÑким измерениÑм актуальны Ð´Ð»Ñ Ð²Ð¾Ð¿Ñ€Ð¾Ñов ÑкономичеÑкого развитиÑ, и иллюÑтрируем макроÑкономичеÑки уÑтойчивые ÑпоÑобы переориентации аналитичеÑкого Ð²Ð¸Ð´ÐµÐ½Ð¸Ñ Ð¾Ñ†ÐµÐ½ÐºÐ¸ реальных активов в каждой из выделенных облаÑтей в континууме ÐкономичеÑких измерений. English Abstract: This chapter written for an upcoming book on Economic development policy challenges highlights a role that modern theories in the field of Economic Measurements (in particular, the Professional Valuation (PV), the Investment-Financial Valuation (IFV) and the Assessment of Efficiency of Investment projects (AEIP) triad) could play in resolving the modern contradictions of Economic development. It is claimed that the modern neoclassical valuation theory applications, such as CAPM and other techinques within the IFV toolkit, when put to out-of-context uses to value real, as opposed to liquid financial, assets result in tangible pricing distortions and distabilizing market procyclicalities, the extent and mechanics of which are analyzed, especially with reference to the property market, on the basis of modern alternative theoretical pathways reliant on the notion of fundamental value and transaction mechanism design theories, including the Transactional Asset Pricing Approach (TAPA).We provide an overview of the subject to show how the modern work on Economic Measurements is relevant to the issues of Economic development and illustrate macro-economically sustainable ways for refocusing the anaytical pre-vision for valuation of real assets for each of the fields within the Economic Measurement traid. This work has been conducted under the sponsorship of the RNF grant 18-18-0048.
Does Liquidity Regulation Impede the Liquidity Profile of Collateral?
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We analyze the pledging behavior of Euro area banks during the introduction of the liquidity coverage ratio (LCR). The LCR considers only a subset of central bank eligible assets and thereby offers banks an arbitrage opportunity to improve their regulatory ratio by altering their collateral pledging with the European Central Bank. We use the existence of national liquidity requirements to proxy for banks’ incentives to exploit this differential treatment of central bank eligible assets. Using security-level information on collateral pledged with the central bank, we find that banks without a preceding national liquidity requirement pledge more and less liquid collateral than banks with a preceding national liquidity requirement after the LCR introduction. We attribute the difference across banks to a preparation effect of the liquidity regulation on the national level.
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We analyze the pledging behavior of Euro area banks during the introduction of the liquidity coverage ratio (LCR). The LCR considers only a subset of central bank eligible assets and thereby offers banks an arbitrage opportunity to improve their regulatory ratio by altering their collateral pledging with the European Central Bank. We use the existence of national liquidity requirements to proxy for banks’ incentives to exploit this differential treatment of central bank eligible assets. Using security-level information on collateral pledged with the central bank, we find that banks without a preceding national liquidity requirement pledge more and less liquid collateral than banks with a preceding national liquidity requirement after the LCR introduction. We attribute the difference across banks to a preparation effect of the liquidity regulation on the national level.
Intermediation in Markets for Goods and Markets for Assets
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We analyze agents' decisions to act as producers or intermediaries using equilibrium search theory. Extending previous analyses in various ways, we ask when intermediation emerges and study its efficiency. In one version of the framework, meant to resemble retail, middlemen hold goods, which entails (storage) costs; that model always displays uniqueness and simple transition dynamics. In another version, middlemen hold assets, which entails negative costs, that is, positive returns; that model can have multiple equilibria and complicated belief-based dynamics. These results are consistent with the venerable view that intermediation in financial markets is more prone to instability than in goods markets.
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We analyze agents' decisions to act as producers or intermediaries using equilibrium search theory. Extending previous analyses in various ways, we ask when intermediation emerges and study its efficiency. In one version of the framework, meant to resemble retail, middlemen hold goods, which entails (storage) costs; that model always displays uniqueness and simple transition dynamics. In another version, middlemen hold assets, which entails negative costs, that is, positive returns; that model can have multiple equilibria and complicated belief-based dynamics. These results are consistent with the venerable view that intermediation in financial markets is more prone to instability than in goods markets.
Out-Of-Sample Performance of Bias-Corrected Estimators for the Ornstein-Uhlenbeck Process
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We investigate out-of-sample forecasting performance of the four bias-corrected estimators recently emerging in the literature for the Ornstein-Uhlenbeck process, including the naïve (NC) estimator, the Tang-Chen (TC) estimator, the Bao, et al. (BY) estimator, and the bootstrap (BP) estimator, along with the benchmark maximum likelihood (LS) estimator. Our Monte Carlo simulations illustrate that the bias-corrected estimators except the BY estimator produce much worse out-of-sample forecasting performance since these estimators have more tendencies to generate negative estimations of the mean reversion parameter when the true parameter is close to zero. However, if we set a zero lower bound to all of these estimators, including the LS estimator, all the bias-corrected estimators improve out-of-sample forecasting performance of the LS estimator as long as the true mean reversion parameter is not very high. Our real data applications confirm these findings overall.
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We investigate out-of-sample forecasting performance of the four bias-corrected estimators recently emerging in the literature for the Ornstein-Uhlenbeck process, including the naïve (NC) estimator, the Tang-Chen (TC) estimator, the Bao, et al. (BY) estimator, and the bootstrap (BP) estimator, along with the benchmark maximum likelihood (LS) estimator. Our Monte Carlo simulations illustrate that the bias-corrected estimators except the BY estimator produce much worse out-of-sample forecasting performance since these estimators have more tendencies to generate negative estimations of the mean reversion parameter when the true parameter is close to zero. However, if we set a zero lower bound to all of these estimators, including the LS estimator, all the bias-corrected estimators improve out-of-sample forecasting performance of the LS estimator as long as the true mean reversion parameter is not very high. Our real data applications confirm these findings overall.
Scaling the Twin Peaks: Systemic Risk and Dual Regulation
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In April 2013, the UK implemented a dual-regulation approach to financial services often referred to as twin peaks. In this paper, we assess the impact of the introduction of twin peaks regulation on the systemic risk contributions of UK financial institutions. Using a matched sample of single- and dual-regulated financial institutions, we provide evidence that twin peaks regulation resulted in a relative reduction in systemic risk for dual-regulated firms.
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In April 2013, the UK implemented a dual-regulation approach to financial services often referred to as twin peaks. In this paper, we assess the impact of the introduction of twin peaks regulation on the systemic risk contributions of UK financial institutions. Using a matched sample of single- and dual-regulated financial institutions, we provide evidence that twin peaks regulation resulted in a relative reduction in systemic risk for dual-regulated firms.
Staples and Office Depot: An Event-Probability Case Study
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Investors in financial markets bet their dollars on whether a merger will raise or lower prices. Below, we apply an event-probability methodology to the proposed merger between Staples and Office Depot, which was challenged by the FTC and eventually withdrawn. In addition to a time-series regression, we also look at the effect of the merger in specific event windows. We find highly significant returns to the only rival firm in the relevant market. We estimate the price effect of the merger and find it highly consistent with independent estimates.
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Investors in financial markets bet their dollars on whether a merger will raise or lower prices. Below, we apply an event-probability methodology to the proposed merger between Staples and Office Depot, which was challenged by the FTC and eventually withdrawn. In addition to a time-series regression, we also look at the effect of the merger in specific event windows. We find highly significant returns to the only rival firm in the relevant market. We estimate the price effect of the merger and find it highly consistent with independent estimates.
The Role of Deposit Guarantee Schemes (DGSS) in Resolution Financing
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Even though the primary function of deposit guarantee schemes (DGSs) is to serve as ‘paybox’ for bank depositors, provide protection to retail depositors, act as a buffer in the event of a banking crisis and contribute to safeguarding the stability of the banking system, DGSs’ financial means may also be used in order to contribute to the financing of bank resolution, where the conditions for resolution are met. The main focus of the present study, structured in four Sections, is to discuss the existing EU rules governing the role of national DGSs in resolution financing under the Deposit Guarantee Schemes Directive (DGSD) and the Bank Recovery and Resolution Directive of the European Parliament and of the Council (BRRD). The role of the European Deposit Insurance Scheme (EDIS) and the Deposit Insurance Fund (DIF) (only for the Member States participating in the Single Supervisory Mechanism (SSM)) in resolution financing on the basis of the Commission’s (still pending) proposal for a Regulation is also briefly presented. Finally, the study addresses the existing asymmetries in the overall structure of the current and the upcoming system of EU banking law pertaining to the ‘contribution to resolution financing’ function of DGSs, and concludes with a modest proposal to overcome them.
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Even though the primary function of deposit guarantee schemes (DGSs) is to serve as ‘paybox’ for bank depositors, provide protection to retail depositors, act as a buffer in the event of a banking crisis and contribute to safeguarding the stability of the banking system, DGSs’ financial means may also be used in order to contribute to the financing of bank resolution, where the conditions for resolution are met. The main focus of the present study, structured in four Sections, is to discuss the existing EU rules governing the role of national DGSs in resolution financing under the Deposit Guarantee Schemes Directive (DGSD) and the Bank Recovery and Resolution Directive of the European Parliament and of the Council (BRRD). The role of the European Deposit Insurance Scheme (EDIS) and the Deposit Insurance Fund (DIF) (only for the Member States participating in the Single Supervisory Mechanism (SSM)) in resolution financing on the basis of the Commission’s (still pending) proposal for a Regulation is also briefly presented. Finally, the study addresses the existing asymmetries in the overall structure of the current and the upcoming system of EU banking law pertaining to the ‘contribution to resolution financing’ function of DGSs, and concludes with a modest proposal to overcome them.
