Thursday, July 9, 2015
S08 (13 rue de l'Université)
Based on an analysis of the Eupean Central Bank’s (ECB) recent efforts to revive the European
securitisation market, this paper shows market-based banking – a key aspect of financialisation – and
central bank empowerment to be linked in a way not hitherto discussed in the literature. In December
2014, the ECB launched an Asset-‐Backed Securities Purchase Programme (ABSPP) as part of its own
‘quantitative easing’ (QE) strategy, which it announced as the last of the major central banks. The
key reason for the ECB’s belated adoption of QE has been a ‘missing-asset-market problem’:
Political and legal issues prevented the ECB from buying sovereign bonds, while the collapse of the
European securitisation market in 2008 made large-scale purchases of private-sector debt
impossible. As a result, there was no asset market deep and liquid enough for the ECB to intervene
in. The paper traces the preparatory works of the ABSPP back to 2010, when the ECB launched an
ambitious ‘Loan-Level Information Initiative’, through to 2014, when loan‐level information for
ABS became a Eurosystem collateral requirement. This re-engineering of the securitisation
market cleared the path for the conduct of asset purchases by the ECB. The episode points towards a
feedback loop whereby securitisiation and market‐based banking have made monetary policy
effectiveness increasingly dependent on the presence, in all sectors and regions of the economy, of
suitably deep and liquid markets for securitised debts. This suggests that the newly empowered
ECB is not just a product, but also an agent of financialisation.
securitisation market, this paper shows market-based banking – a key aspect of financialisation – and
central bank empowerment to be linked in a way not hitherto discussed in the literature. In December
2014, the ECB launched an Asset-‐Backed Securities Purchase Programme (ABSPP) as part of its own
‘quantitative easing’ (QE) strategy, which it announced as the last of the major central banks. The
key reason for the ECB’s belated adoption of QE has been a ‘missing-asset-market problem’:
Political and legal issues prevented the ECB from buying sovereign bonds, while the collapse of the
European securitisation market in 2008 made large-scale purchases of private-sector debt
impossible. As a result, there was no asset market deep and liquid enough for the ECB to intervene
in. The paper traces the preparatory works of the ABSPP back to 2010, when the ECB launched an
ambitious ‘Loan-Level Information Initiative’, through to 2014, when loan‐level information for
ABS became a Eurosystem collateral requirement. This re-engineering of the securitisation
market cleared the path for the conduct of asset purchases by the ECB. The episode points towards a
feedback loop whereby securitisiation and market‐based banking have made monetary policy
effectiveness increasingly dependent on the presence, in all sectors and regions of the economy, of
suitably deep and liquid markets for securitised debts. This suggests that the newly empowered
ECB is not just a product, but also an agent of financialisation.
