Annual Report 2024
Capital markets union
A strong European capital markets union is essential to make the European Union more competitive and put capital to work where it’s needed. Our advisory services support the EIB Group’s four capital markets union building blocks by conducting studies in relation to securitisation.
Securitisation to improve the flow of finance
The capital markets union is a plan to create a single market to get money flowing in savings and investments across Europe. This flow will help investors, companies and the general public, regardless of where they are located.
A capital markets union will provide businesses with a greater choice of funding at lower costs and will especially offer small businesses more financing possibilities. It will support the economic recovery after the COVID-19 pandemic and create jobs, offering new opportunities for savers and investors, create a more inclusive economy and help Europe meet its new green and digital goals.
A strong European capital markets union will also help Europe’s global competitiveness and autonomy and make the financial system more resilient to troubles. The EIB Group is creating financial instruments that could be the building blocks of a real capital markets union. Among these is securitisation.
The securitisation market in Europe is behind other parts of the world, such as the United States, partly because we lack cohesive regulations. To identify ways the EIB Group can help the securitisation market, EIB Advisory experts under the InvestEU Advisory Hub conducted a study to map and understand the market in Europe. They conducted interviews with financial institutions, and with institutional investors such as insurance companies, pension funds and other investment funds. This identified the market’s drivers and obstacles, highlighting areas for the EIB Group to develop new products. In particular, fragmented regulations across EU countries prevent the standardisation of the securitisation market, make it harder for new issuers to get involved, prevent expansion, and limit the involvement of institutional investors such as pension and investment funds and insurance companies.
What is securitisation?
Securitisation involves combining different types of assets, such as mortgages, car loans or credit card obligations, and selling them to another investor as “securities.” Securitisation can improve the flow of financing. It can help banks reduce the risks of their investments and free up new capital that can be lent to more businesses.