On Tuesday 2 July, the European Economic and Social Committee organised a public hearing on the issue of reviving securitisation, as advocated by a number of European players as a way of making progress on Capital Markets Union (see EUROPE 13394/1).
According to Francesco Tuzi, an expert at the European Commission’s Directorate-General for Financial Stability, Financial Services and Markets (‘DG FISMA’), “the main message [on this revival] is clear to everyone, but the contours are rather vague (...), there are differences of opinion on how to go about it (...), there is a whole range of things to study, because securitisation affects many different sectors”.
Securitisation is a financial technique that enables a company to transform a set of assets, generally receivables, into financial securities that can be traded on the financial markets, thereby freeing up capital for other investments or liquidity needs.
However, this financial technique presents challenges in terms of financial stability and transparency. In the wake of the 2007 financial crisis, global regulators, particularly in the EU, reacted by imposing stricter requirements to prevent risks.
“What’s on the market today is nothing like what we had before the financial crisis. We have laid the foundations for a much more transparent market”, said Mr Tuzi on Tuesday.
He added: “More securitisation is not an end in itself, but it does allow us to finance our economy in a more sound and regulated way”.
In March, the euro area countries invited the European Commission to assess the supply and demand factors hampering the development of the securitisation market in the EU (see EUROPE 13368/3). The Commission plans to launch a public consultation on this issue shortly (see EUROPE 13419/19). (Original version in French by Bernard Denuit)