Thus, CRD II views information on individual underlying exposures (i.e. loan-level data) as necessary for investors to be able to make reasoned investment decisions. However, I want also to make clear that, along with policy initiatives, the structured finance industry has an essential role in restarting the European securitization markets and setting them on a sounder footing. The industry cannot realistically expect that the return of investors’ confidence will be just a question of time and implementing regulatory action. Likewise, certainly confidence will not be restored by introducing minor changes to the instruments and the functioning of the markets. On the contrary, confidence in securitization will return among private as well as public stakeholders only if market participants and their associations are able to materially enhance market standards and practices. Let me stress also that the industry cannot expect public authorities to accept merely cosmetic changes to the instruments and the markets. This, for example, applies to the Eurosystem’s collateral framework. In a context in which outstanding ABS represent almost 25% of the total collateral deposited by counterparties with the Eurosystem, it is imperative for the Eurosystem to be prepared to perform a proper assessment of risks whenever needed. In this context, loan-level information will enable ratings agencies to produce meaningful surveillance reports, which could in turn help the Eurosystem to diligently assess the risks implied by the collateral accepted in our refinancing operations. Industry-led initiatives aimed at revitalising the European securitisation market are inspired by high level principles, which typically meet immediate consensus.

However, when these principles are transposed into specific provisions in some market convention, consensus becomes less easy to reach. In fact, aligning all the stakeholders’ incentives often proves to be difficult and there is the risk of only reaching a very low minimum common denominator. Certainly, this would not be sufficient to win back the confidence of public and private players in securitization. I therefore invite the industry to continue and to strengthen its efforts in this vital area of work. VI. Concluding remarks  Let me conclude by saying that, if managed in good order, securitisation should be a welfareimproving tool, because value is created by secured funding that is correctly structured and allows to adequately distribute financing and funding, and the related risks among households, enterprises, banks and investors. When it works properly, securitisation may represent a significant step towards more complete credit markets, thereby contributing to enhancing the efficiency of the economic system. The revival of securitisation markets is  BIS Review 84/2010  5  needed in many countries to support the provision of credit to the real economy, particularly to households and small business. While it is essential to define new market standards in terms of simplicity and transparency, more actions may be needed to re-start the securitisation market. There does not seem to be one single and simple solution that can unlock the securitisation market.