Francesco Mazzaferro, Head of the European Systemic Risk Board (ESRB) Secretariat, addressed the European Parliament’s Committee on Economic and Monetary Affairs during a hearing on the review of the EU securitisation framework.
Mazzaferro stressed that Europe urgently needs to channel savings into productive and innovative investments to strengthen its economy – a key message of the Draghi Report. A well-functioning securitisation market, he said, can support this goal by freeing up bank balance sheets, expanding financial markets and increasing resilience.
However, he cautioned that securitisation is not a miracle tool: it cannot replace venture capital, mobilise household savings, or solve the fragmentation of Europe’s capital markets.
The EU securitisation market, Mazzaferro noted, remains:
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Small and concentrated, dominated by a few countries and large banks;
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Stagnant in traditional deals, but showing strong growth in synthetic securitisations;
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Closed and limited in investor diversity, as many deals stay on banks’ balance sheets;
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High-quality, with over 90% of rated instruments classified as investment grade.
The ESRB welcomed parts of the European Commission’s proposal – such as simplifying disclosure rules and requiring private securitisations to be reported – but expressed concerns about others.
In particular, Mazzaferro warned against allowing insurers to provide unfunded guarantees under the STS (simple, transparent, standardised) framework. Such a change, he said, would increase concentration and counterparty risks, deepen links between the banking and insurance sectors, and could amplify financial contagion in times of stress.
To safeguard stability, the ESRB recommends maintaining the rule that credit protection provided by private entities must be fully collateralised.
