In a recent Green Paper, the European Commission seeks comment on how to ensure the supply and availability of long-term financing to the real economy, and specifically to small- and medium-sized enterprises (SMEs). Among the key issues on which the Commission encourages debate is Europe's historically heavy dependence on bank intermediation in financing long-term investment, and whether potential alternatives can and will emerge. The Commission specifically notes that a reshaping of the securitisation markets could help unlock additional sources of long-term finance, through the development of "simple securitisation products based [on] clear and unleveraged structures, using well-selected, diversified and low-risk underlying assets." That the Commission is supportive of securitisation as a potential funding tool for the European economy is welcomed, and responses to its specific question (no. 14 in the Green Paper): "how could the securitisation market in the EU be revived in order to achieve the right balance between financial stability and the need to improve maturity transformation by the financial system?" may elicit some interesting answers. It may be that the Commission's work in this area will (going forward) reflect the European Central Bank's recently-stated intention to promote the asset-backed securities market (see further below) in conjunction with the European authorities. Comments on the Green Paper are requested by 25 June 2013.
Note: Commission Green Papers are intended to stimulate discussion and debate on particular topics in consultation stage, and generally do not represent the Commission's final position. Any specific proposals arising from the consultation would typically be made in a pre-legislative White Paper. In this case, the Commission's proposals are expected to take into account the ECB's work with the European institutions to promote securitisation.