LONDON/FRANKFURT May 30 The European Central
Bank and Bank of England set out detailed proposals on Friday to
boost the market for asset-backed securities in the European
The so-called ABS market for packaged debt bundles of loans
slumped after the 2008 financial crisis but is now seen as
necessary to help build a stronger economy.
Last month the two central banks said public intervention to
kick-start the market. They accused global regulators of taking
too tough a stance on the sector.
The proposals in Friday's report aim to reduce the risk of
securitised debt by limiting its tendency to concentrate risk in
institutions vital to the financial system, as well as to make
their performance more predictable.
"Involvement in this market by the authorities may be
desirable to support its revitalisation in a more robust form,"
the paper said, adding it was now seeking industry feedback.
It suggested following the model already adopted for
asset-backed securities eligible for central bank transactions,
which aim to identify products that are simple, robust and
transparent, enabling investors to accurately assess risks.
It also said they may warrant specific capital treatment and
said that credit registers which provide data on whether small
and medium-sized businesses default on loans should become more
* To read the full report, go to www.ecb.europa.eu/
(Reporting by David Milliken and Eva Taylor)