Securitisation to the Rescue

The European Capital Markets Union Project, the Euro Crisis and the ECB as ‘Macroeconomic Stabilizer of Last Resort’

Policy Study

15/09/2016

The European Capital Markets Union (CMU) project is a strong political commitment to market-based finance, the new code word for shadow banking. Since securitisation, the financial innovation that triggered the Global Financial Crisis of 2008, is key for market-based credit intermediation, its revitalisation has become of strategic importance. Considering that the CMU is an important pillar of European plans to support growth and to complete the European Monetary Union (EMU), what explains that securitisation (and market-based finance) have become key for achieving these goals? Challenging arguments on regulatory capture, I claim that this outcome can be explained by not only taking the agency of financial market actors seriously, but also the agency of important EU actors, in particular the European Central Bank (ECB). In a nutshell, I argue that the political plans to strengthen securitisation and market-based finance have its roots in the ECB’s efforts to stabilize the euro zone.

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