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 Full text 
Monday, 15 April 2019 - Strasbourg Revised edition

Sovereign bond-backed securities (debate)

  Valdis Dombrovskis, Vice-President of the Commission. – Madam President, it is good to have this important debate today on Sovereign Bond-Backed Securities.

Sovereign Bond-Backed Securities, or SBBS as they are known, are a novel instrument — constructed out of euro area sovereign bonds through pooling and tranching — that could help us advance towards a more complete Banking Union and a more efficient and integrated Capital Market Union. They could in fact boost private sector risk sharing, especially across borders, and equip banks with an additional tool to diversify their sovereign exposures. This would further weaken the nexus between banks and their own sovereign — which proved a major source of vulnerability in the euro area debt crisis.

As you know, the existing regulatory framework includes some obstacles to SBBS, in that they would be at a regulatory disadvantage vis-à-vis euro area sovereign bonds. Our May 2018 proposal aims at enabling them, basically by granting them same regulatory treatment as for sovereign bonds.

Importantly, SBBS would, by design, not involve any mutualisation or transfer of risks among Member States, as they are a purely private sector instrument for private sector use.

And I also want to stress that our proposal does not alter in any way the regulatory treatment of euro-area sovereign bonds, rather our proposal takes such regulatory as a give.

I also want to stress here that our proposal does not alter in any way the regulatory treatment of euro area sovereign bonds. Rather, our proposal takes such regulatory treatment as a given.

I would like to commend the rapporteur for this file, Mr Jonás Fernández and all colleagues in the ECON committee for their steadfast efforts on this file, which allowed a supportive vote on 21 March this year and I am of the view that a supportive vote by this plenary session, coming on the heels of the positive vote in the ECON Committee, would send a strong signal to the Council about the importance that both the Commission and Parliament attribute to this file and this should lead the Council to give renewed priority to this file.

Last updated: 8 July 2019Legal notice