LONDON, June 2 Bank of England deputy governor
Jon Cunliffe said asset-backed securities in the European Union
should be made more transparent to revive a market badly hit by
the 2008 financial crisis.
He was speaking after news the European Central Bank and the
Bank of England had set out proposals on Friday to resurrect the
European Union's market for asset-backed securities (ABS) and
help the flow of credit to smaller businesses.
Ensuring the banks that create asset-backed securities,
which were at the heart of the global financial crisis, retain
some exposure to the underlying assets was an important element
of this revival, Cunliffe said in a BBC radio interview
broadcast on Monday. (Banks often moved their ABS "off the
balance sheet" effectively transferring all risk to investors.)
"The other part is to develop standards so that 'it does
what it says on the tin', but it is actually a jar. You want a
label on the outside of the jar that is clear, that uses
understandable (terms) and ... you can see into the jar," he
Cunliffe's interview did not cover monetary policy or the
BoE's regulatory responsibilities.
(Reporting by David Milliken; Editing by Eric Meijer)