If Europe wants securitisation, it must have the investors on board

Europe’s securitisation debate rightly pays close attention to banks, reflecting the bank-based nature of the EU financial system and the central role they play in origination, risk transfer and credit provision. But securitisation is a capital markets instrument, not simply a way for banks to release capital. A functioning market needs both sides: issuers willing to bring transactions to market (including non-bank originators), and investors willing to buy, hold and price the risk.

If the EU wants the market to scale, the framework must be balanced across both the sell side and the buy side. Without investors, there’s no securitisation market to develop.

Apostolos Thomadakis is Head of Research at ECMI, and Senior Research Fellow and Head of the Financial Markets and Institutions Unit at CEPS.