LONDON, March 17 (Reuters) - Global regulators will intensify their efforts to revive a securitisation market tarnished by the financial crisis and now seen by policymakers as a key source of funds for the economy, the head of an umbrella regulatory group told Reuters.
Securitisation bundles loans into interest-bearing bonds to raise money that banks can use to fund themselves and lend to small companies.
Banks, particularly in Europe, are traditionally the main supplier of loans but have become cautious as they focus on rebuilding their capital buffers.
The International Organization of Securities Commissions (IOSCO), which groups global market regulators, and its banking counterpart, the Basel Committee, will consider possible remedies.
"IOSCO and the Basel Committee are close to agreeing on a working group to look at how the securitisation markets are working, and to see whether new thinking is needed." IOSCO secretary general David Wright told Reuters on the sidelines of a Chatham House financial conference.
The sector was tarnished when securitised products based on subprime U.S. home loans became untradable in 2007, sowing the seeds of a global markets meltdown and banking failures.
The European Union's executive European Commission is also keen to bring securitisation out of the cold and will publish its plans next week on ways to boost long-term financing.
Efforts to revive securitisation have also been caught up in separate regulatory attempts to crack down on so-called shadow banking, or lending outside mainstream methods such as regulated banks.
The EU wants a greater amount of financing for the economy from market-based sources like securitisation.
Currently about 30 percent of financing comes from such sources, the rest from banks, roughly the opposite situation to the United States which is a model some European policymakers want to match to reduce the concentration of risks at banks and diversify funding.