Appeals from the European Commission gets the European Central Bank For securities. The European Central Bank (ECB) from the European Commission on the issue of securitization appears to take distances by considering that the new institutional framework proposed is excessively resilient, thereby increasing the risks.

It is noted that the process of securitization, that is, the conversion of all kinds of banks’ claims, such as red loans, into bonds that are then channeled to investors, was “the ground” in which the great crisis of 2008 broke out. Greek banks.

Through its supervisory arm, the SSM, the ECB today made it clear that the European Commission is exceeding the limits by relaxing the securitization rules for banks, especially for more complex and possibly more dangerous transactions.

It is recalled that the European Commission He proposed in June the simplification of the rules governing securitization, in an effort to release capital for lending and to help Europe compete with the United States financially. The changes proposed by the Commission include that investors will no longer have to verify on their part whether the bank issuing the securitized bonds meet all the necessary conditions.

However, the ECB, which oversees the largest eurozone banks, argues that some of the proposed changes increase the risks.

In his speech the SSM executive Pedro Machadohe warned that the practice of securitization has inherent risks to financial stability, which are more difficult to identify in more complex securitization structures, “adding that there is no inherent link between securitization and additional lending.” He also said that, although the securitization market is smaller in Europe than in the United States, this does not reflect the rapid development of synthetic securitization in the EU.

Machado warned not to promote “complex securitization and opaque structures” and said new rules should support “simpler, more standardized and more durable transactions”.