The most recent paper dated 13th September 2023 outlines a joint initiative by France and Germany to enhance the Capital Markets Union (CMU) in the European Union (EU). The primary focus is on mobilizing private capital for financing the transition and improving the role of capital markets in funding businesses. It is especially worth to note that securitisation is viewed as a critical tool for risk and liquidity management for banks and enabling increased credit lending to companies through banks and capital market activities.
Specifically, the proposed measures related to securitisation are as follows:
- Prudential Framework Amendments: Efforts have been made to amend the prudential framework for securitisations in the short run through the CRR review. These amendments aim to enhance the regulatory environment to maximize the potential of securitisation for financing the economy.
- Solvency II Review: Ongoing reviews, such as Solvency II, provide an opportunity to adopt targeted amendments to prudential rules for securitisation within the current legislative cycle. This suggests a continuous effort to refine regulatory frameworks for securitisation.
- More Comprehensive Reform of Regulation in long run: Recognizing that further changes may be necessary, France and Germany express the need for a more comprehensive reform of the regulatory framework of securitisations in the longer run. This is viewed as essential for supporting the financing of Europe's economy.
The objective of these measures is to ensure that securitisation effectively contributes to financing the real economy, offering increased lending capacities to companies and fostering economic growth. Additionally, the text emphasizes the need for a strong European financial market union. TSI welcomes this new approach by France and Germany. A pragmatic reform with reduction of complexity and bureaucracy should take place, and proportionality in financial market regulation.