EU needs to leverage securitisation for economic growth and sustainable future

In an opinion adopted in plenary, the European Economic and Social Committee (EESC) has called for reforms to unlock the full potential of securitisation in the EU. By boosting investment and improving access to credit, the EESC aims to make securitisation a key tool in achieving the EU’s economic goals –especially its green transition and the completion of the Capital Markets Union.

Securitisation, the process of converting loans and other illiquid assets into marketable securities, has been a crucial financial tool for years. It helps banks transfer credit risks to investors, freeing up capital to issue new loans and support economic growth. However, since the 2008 financial crisis, the EU’s securitisation market has struggled to catch up with the US, remaining fragmented and underdeveloped.

‘National differences in laws, taxes, and financial structures make cross-border operations difficult. Securitisation also competes with covered bonds, which, while seen as safer investments, prevent banks from issuing new loans,’ explains EESC rapporteur Philip Von Brockdorff.

Despite the rise of synthetic securitisations – where risks are transferred without the underlying assets –traditional securitisation remains underused. It is crucial for funding small businesses and key sectors of the economy. The market also has significant untapped potential for financing green projects such as renewable energy and sustainable housing, which are vital for meeting the EU’s climate goals.

Co-rapporteur Antonio García Del Riego adds: ‘It is time to reimagine securitisation as a key catalyst for economic growth, sustainability and more integrated Capital Markets in Europe. With banks providing 80% of their financing needs, smarter rules could unlock billions in funding for people, families, and small businesses. I’m pleased to see the new Commissioner for financial markets focusing on creating a simpler, more unified securitisation system. By helping banks share more of their risk, we can attract major investments from both local and international players, driving growth and opportunity for all’.

A path to green securitisation

One of the biggest opportunities lies in green securitisation. By broadening ESG (environmental, social and governance) disclosure requirements, securitisation could attract investors who are keen to support the green transition. A dedicated framework for green securitisation would help fund projects such as renewable energy, property renovations, and sustainable mobility. By aligning market practices with ESG priorities, securitisation can help mobilise investments critical for the EU’s climate goals while also benefiting small businesses and fostering economic growth.

Breaking down barriers and fragmentation

To tackle market fragmentation, the EESC calls for harmonising national laws on taxation, insolvency, and contracts. This would facilitate smoother cross-border securitisation and create more liquid markets. Simplifying the process for Significant Risk Transfer (SRT) transactions –key to transferring credit risks –could further enhance market efficiency.

Simplifying regulation to attract investors

The EESC recommends regulatory adjustments to recalibrate prudential requirements, making them better aligned with real risks. Simplifying reporting processes and streamlining ESMA templates could lower costs and encourage more institutional investors to participate.

Ensuring stability and oversight

A critical element of the EESC’s vision is maintaining strong oversight. Securitisation involves complex portfolios, so careful monitoring is essential to prevent risk concentration. Close cooperation among supervisors is needed to track risks across the financial system and avoid vulnerabilities in less regulated sectors.

A balanced approach

Securitisation should complement – not replace – other financial instruments, such as covered bonds. Each plays a unique role in funding the EU economy, and a balanced approach will ensure markets remain stable. When integrated properly, securitisation can provide liquidity and serve as an effective tool for risk management.

A stronger, greener economy

The EESC envisions a securitisation market that strengthens Europe’s financial resilience, deepens capital markets, and supports sustainable growth. This vision can only be realised through collaboration among EU institutions, regulators, and market participants. By addressing regulatory and structural barriers, enhancing transparency, and embracing green finance, securitisation can become a cornerstone of the EU’s economic strategy – driving both prosperity and sustainability.