Securitization: The Road Ahead
Staff Discussion Notes, January 26, 2015
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- Securitization: The Road Ahead
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Bibliographic details
- Authors: Miguel A. Segoviano, Bradley Jones, Peter Lindner, Johannes Blankenheim
- Published: January 26, 2015
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781498368285.006
Overview
- Objective: Preserve beneficial features of securitization while mitigating features that may pose risks to financial stability.
- Approach: Proposes a broad suite of principles applicable to various elements of the financial intermediation chain.
- Scope: Targets both supply- and demand-side inefficiencies to put securitization back on a sound, growth-supportive footing.
- Distinguishing feature: Departs from others by offering principles across the intermediation chain and proposing measures after identifying where policy makers have already made progress.
Key Findings
- Securitization has beneficial features that warrant preservation.
- Certain features of securitization may pose risks to financial stability and require mitigation.
- Rehabilitation of securitization markets faces impediments on both supply and demand sides.
- Industry classification of risk lacks sufficient consistency; more consistent standards are encouraged, applied at a granular level rather than an overarching level.
Policy Recommendations and Measures Proposed
- Implement a comprehensive set of reforms addressing:
- Supply-side inefficiencies.
- Demand-side inefficiencies.
- Adopt a broad suite of principles across the financial intermediation chain to guide reform.
- Encourage more consistent industry standards for the classification of risk, applied granularly.
- Propose measures to address remaining impediments to the rehabilitation of securitization markets.
Initiatives for Market Development
- Introduce initiatives to foster development of a diversified non-bank investor base for securitization in Europe.
- Recognize progress already achieved by policy makers and build on that progress with targeted measures.
Subject Tags and Keywords (from source)
- Subject: Credit ratings, Financial institutions, Financial services, Loans, Money, Mortgages, Securities, Securitization
- Keywords: aggregate risk label, asset-backed securities, bank, capital, capital charge, capital requirement, cliff effect, collaterized mortgage obligation, credit rating agencies, Credit ratings, EU economy, Europe, finance, financial Instruments, Global, global financial crisis, institutional investors, intermediation, investment banking, Loans, mortgage, mortgage loan, mortgage-backed securities, mortgages, prepayment risk, rating, regulation, risk weight, SDN, Securities, Securitization, securitization market, securitizations
Content in this bundle
- Executive Summary