To encourage credit to European small and medium-sized enterprises, it is necessary to speed up the Asset-backed securities reform (Abs), i.e. the bonds arising from the securitization of loans to SMEs. This is the position of Yves Mersch, member of the board of the ECB, who said in London today that he hoped the joint document prepared by the Eurotower and the Bank of England on this issue is presented at the annual IMF meeting scheduled for the weekend in Washington.
“Not all European securitizations deserve the bad reputation they have attracted in recent years – continued Mersch -. Linking the financial needs of SMEs with the funds of banks and investors through these types of instruments can increase the financing capacity of banks and spread risk.
The ECB believes that the European abs “be confidential inadequate treatment in current legislation and proposals – Mersch underlined again – and, therefore, thinks it is important to quickly resolve the issues in the treatment of the highest quality securitizations”.
According to Mersch, Abs could be divided into several categories, granting preferential treatment to those who meet the most stringent requirements.
In general, the issue of Abs takes place through Special Purpose Vehicles (Spv) created by banks, companies or public administrations that transfer credits or other financial assets that are normally not very liquid and difficult to negotiate (for example, mortgage loans) to these vehicles. The Spv issues the bonds backed by the credits themselves, which are then placed on the market.
