Reviving securitisation

M. Segoviano, B. Jones, P. Linder and J. Blankenheim

Financial Stability Review, 2015, issue 19, 51-87

Abstract: Securitisation is a useful instrument to efficiently channel financial and economic resources. While a revival in securitisation activity will not, in and of itself, be a panacea for restoring growth in Europe, a healthy regional market for securitisation has the potential to confer two important benefits. First, it could help in alleviating tight financing conditions for the corporate sector by reducing bank funding costs and helping to make room on bank balance sheets for new lending. Second, it could play a role in the longer-term aim of diversifying the European economy away from its heavy reliance on bank financing, and toward a more balanced with capital market-centered intermediation model. A comprehensive set of reforms – targeting both supply – and demand-side inefficiencies – will be needed for securitisation to meaningfully support economic growth and financial stability in Europe. Prominent among such measures are the strengthening of each element of the financial intermediation chain, and the development of a dedicated non-bank institutional investor base.

Date: 2015
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