Contingent Convertible Bond Watch

In my last Times column, I wrote approvingly about the idea of requiring financial institutions to issue contingent bonds that can be converted into equity if a financial crisis occurs and recapitalization is needed.  A reader alerts me to this news from Switzerland:

Swiss officials Thursday backed new banking laws to prevent the failure of one or both of Switzerland's major banks from imperiling the rest of the banking system.... Specific capital measures the commission is backing include having banks issue so-called contingent convertible bonds, which can convert into shareholders' equity in the event of a bank crisis.