Understanding Securitisation: Background − benefits − risks

14-10-2015

In the blame game that followed the recent financial crisis, securitisation was held up as one of the main culprits. This reputation, amongst other factors, translated into a significant drop in issuance since the crisis, both in Europe and in the US. Nevertheless, the true picture is more nuanced − although securitisation presents real risks, it can also bring benefits to issuers, investors and the economy in general. Given this, and in the context of the current low-growth economic environment, a simpler and more transparent form has been proposed by various stakeholders, in the context of the creation of the Capital Markets Union, as a way to boost the European economy.

In the blame game that followed the recent financial crisis, securitisation was held up as one of the main culprits. This reputation, amongst other factors, translated into a significant drop in issuance since the crisis, both in Europe and in the US. Nevertheless, the true picture is more nuanced − although securitisation presents real risks, it can also bring benefits to issuers, investors and the economy in general. Given this, and in the context of the current low-growth economic environment, a simpler and more transparent form has been proposed by various stakeholders, in the context of the creation of the Capital Markets Union, as a way to boost the European economy.