Sovereign bond-backed securities (SBBSs) can contribute to greater diversification of and risk reduction for sovereign bond portfolios held by banks and other financial operators. This could have a positive impact on the stability and resilience of the financial system and improve financial market integration.
The EESC backs the Commission's legislative proposal to establish an enabling framework that allows SBBSs to be developed by the market. The Committee supports the introduction and testing of SBBSs on the markets, but at the same time calls for a number of open questions in the proposal to be addressed.
"The only way to see whether banks and investors are really interested in SBBSs is to test them", said Daniel Mareels, rapporteur for the opinion on the subject. SBBSs could help to weaken the close link between banks and their home countries. The EESC has been calling for additional action to achieve this since the financial crisis.
It will, however, be important to ensure the clarity, efficiency and effectiveness of the proposed framework and, whilst the EESC agrees with many aspects of the proposal, others need to be strengthened: monitoring by the ESMA will for instance need to be tighter and start earlier, if special purpose entities are to be allowed to self-certify the composition of the underlying portfolios of SBBSs.
A number of unanswered questions also need to be addressed, including whether SBBSs would work effectively under all circumstances, and there will need to be further reflection on whether SBBSs should be offered to private savers and consumers.
The proposed framework should be further developed in close dialogue with all stakeholders. (jk)