Following the speech by Christine Lagarde last November calling for the revitalisation of the European securitisation market as a key priority for the European Union, the European Central Bank has now issued a statement by its Governing Council on advancing the Capital Markets' Union. As in the speech by Ms Lagarde, the statement places the growth of a securitisation market at the center of its recommendations. Together with consolidated European supervision, the harmonisation of insolvency, accounting and securities laws, the improvement of post-trading regimes and the amelioration of the fiscal disadvantage faced by equity investments, securitisation is one of the ECB's five key reforms. Also welcome is the fact that the ECB does not just stay within generalities in calling for an improved market but explicitly focuses on the items that need fixing: the prudential treatment of securitisation for bank and insurance investors and the disproportianate due diligence and disclosure burdens that tilt the playing field against securitisation. Interestingly, it also raises the issue of a possible use of public guarantees to assist the market. This is certainly an idea that has been doing the rounds within policy circles in recent months and will no doubt generate quite a lot of debate within the European Union.
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