On 27 March, the European Commission recommended reviving securitisation to make it easier for small and medium-sized enterprises to access the capital markets. Is securitisation about to make a comeback?
In a depressed economic environment, the European Commission has effectively proposed reviving securitisation as part of its action plan dated 27 March to ensure the long-term financing of the economy. The European Central Bank (ECB) and the Bank of England (BoE) have also called for greater use of securitisation again in Europe. In terms of outstanding, European securitisation peaked at €2.2 trillion euros in 2009 before falling back to the 2007 level of about €1.5 trillion euros at year-end 2013. The “toxic” label that was often attributed to securitisation during the financial crisis was due more to the way this refinancing technique was used rather than to the technique itself.