The European Economic and Social Committee (EESC) has pronounced itself in favour of a simple, transparent and standardised securitisation system in Europe. While Europe is still feeling the aftershock of the 2008 financial crisis, triggered by an uncontrolled and runaway securitisation system in the US, why is this now back on the table? Because a new securitisation system in Europe can still be secure, given certain conditions, and can create growth through the unlocking of additional credit.
The risks involved in such transactions should now be clearly understood and responsibilities well established before launch, following the whole chain from the issuer to the investor. This will unlock significant credit potential, representing an additional amount of credit of EUR 100 to 150 billion, and growth opportunities for households and SMEs who currently suffer from reduced access to bank funding.
However, the EESC warns that this still complex investment product must not be targeted at potentially "vulnerable" groups, such as small investors and consumers. For those categories, the EESC requests a formal prohibition explicitly included in legislation. "Clarity and transparency in securitisation rules on the one hand, and protection for the small players on the other hand: These products are only suited for professional and institutional investors.", says Daniel Mareels, EESC rapporteur on the opinion.
The EESC calls for appropriate supervision of this new system by both the European Central Bank and national supervisory authorities, and for an assessment after two years.