Former ECB president Mario Draghi published a report for the European Commission – in which he proposes securitization deregulation.

Specifically he says:

• Capital requirements for securitised assets should be reduced.
• Current capital charges do not reflect actual risks for some asset classes.
• Transparency and due diligence requirements should be reviewed.
• The EU should set up a standardized securitization platform.
• The EU should consider public support – for example first-loss tranche guarantees.

The reasoning is that the European securitization market is broken following high levels of regulation following the 2008 financial crisis. This is leading to less capital being available for European investment and development.

Draghi points to annual European securitization being about 0.3% of GDP – whereas annual US securitization is 4% of GDP.

The report is titled “The future of European competitiveness”.