The relaunch of securitisation, proposed by the European Commission in mid-June (see EUROPE 13661/26), enjoys broad support within the Council of the European Union. On Tuesday 8 July, many European finance ministers expressed their interest in revitalising this market, which they see as a lever for raising capital and stimulating investment.
However, a number of points have been raised, particularly with regard to due diligence, prudential rules, the definition of “public” securitisation and, more generally, the need for solid guarantees of financial stability in the relaxation of the current regulatory framework.
“All these rules came at once after the [2008 financial] crisis”, Swedish minister Elisabeth Svantesson was keen to point out during a public session of the Ecofin Council. “We regulated heavily, and some of it went a bit too far (...), so I welcome it. But still, remember financial stability”, she stressed.
The financial crisis was triggered by the collapse of the sub-prime mortgage market in the United States, whose securitisation allowed the risk inherent in these contracts to spread to the entire financial system, forcing several European countries to rescue their banks.
On Tuesday, the Greek minister, Michael G. Arghyrou, whose country was at the origin of the euro area sovereign debt crisis, said that “a more dynamic securitisation market will unlock capital and mobilise private investment to better support economic growth and promote the Union’s objectives (...)”.
“We welcome the Commission’s proposals, as they are heading in the right direction by removing obstacles that hinder growth (...), while at the same time safeguarding financial stability”, he said.
Other EU countries have voiced their support for the Commission’s proposed reform package, described as an “ambitious proposal” by Spain and an “important step towards freeing up capital” by Poland.
“Fewer barriers mean greater efficiency”, said Lithuanian minister Rimantas Šadžius, describing the reform as particularly relevant to the Baltic countries capital markets, which he considers to be insufficiently deep.
Finland is “cautiously positive”, said Minister Riikka Purra.
The Danish Presidency of the Council of the EU hopes to make rapid progress on this key issue in the strategy for a ‘Savings and Investment Union’ (see EUROPE 13603/5). “There’s a broad agreement in the Council to make progress on this proposal and reach an agreement as soon as possible this year”, Denmark’s Minister for Economic Affairs, Stephanie Lose, told the press. (Original version in French by Bernard Denuit)