Australia’s AT1 phase out proposal unlikely to be replicated by other regulators

AT1 bonds a key part of the financial system and unlikely other regulators will follow Australia’s lead

Australian regulators have proposed phasing out Additional Tier 1 (AT1) bonds, a move that is unlikely to be replicated by other regulators, according to experts.

AT1 bonds are a type of debt security that is issued by banks and other financial institutions to raise capital. They are considered to be a riskier investment than traditional bonds, but they also offer higher returns. This proposal could discourage banks from issuing AT1 bonds, as they would no longer be able to count them towards their capital requirements.

Experts have argued that the phase-out of AT1s is not necessary and could actually have negative consequences for the financial system. They say that AT1s are a valuable source of capital for banks and that they help to make the financial system more resilient.

Other regulators unlikely to follow Australia's lead

Other regulators are unlikely to follow Australia's lead in phasing out AT1 bonds, according to experts. They say that AT1s are a valuable part of the financial system and that they help to make it more resilient.

The International Monetary Fund (IMF) has said that AT1s are a "critical part of the global financial safety net" and that they should not be phased out.

The Basel Committee on Banking Supervision (BCBS) has also said that AT1s are a "key component of the global regulatory framework" and that they should not be phased out.