On September 30, 2015, the European Commission launched a consultation on proposed action to address the legal and practical issues in the EU covered bond market to facilitate cross-border investment within the EU and from third countries. The consultation forms part of the Commission’s CMU initiative. The regulation of covered bonds is a matter of Member State national laws although the prudential treatment of covered bonds is provided for in a variety of EU legislative acts such as the Units for Collective Investment in Transferable Securities Directive, the CRR and the Bank Recovery and Resolution Directive. There are differences between the legal frameworks and supervisory practices of various EU Member States for covered bonds as highlighted by the EBA in its July 2014 report. The Commission is proposing a more integrated EU-wide covered bond framework that could be reflected in legislation and/or a set of  recommendations and the consultation paper includes a discussion of the various approaches that might be taken in an effort to introduce harmonization across the EU. The consultation closes on January 6, 2016.

The EU Covered Bond consultation paper is available at: http://ec.europa.eu/finance/consultations/2015/coveredbonds/docs/consultation-document_en.pdf.