London - The director for financial stability at the Bank of England, Andy Haldane, said the BoE wants to throw its weight behind the use of securitisations in boosting flows of credit to small businesses, the Financial Times reported on Tuesday.
Haldane, a senior policymaker on the Financial Policy Committee, said bundled debt in Britain need not be the “bogeyman” it was during the financial crash and that it could play a role in small-and medium-sized enterprise lending and other areas including student loans, the newspaper said on its website.
Securitisation, in which banks bundle pools of loans and sell the resulting package to raise funds for lending, was discredited in 2007 when underlying mortgages defaulted, triggering the global financial crisis, which resulted in banks having to be rescued by taxpayers.
Now, however, the securitisation market is seen as a valuable option for financing business growth.
The Financial Policy Committee said in November that it may step in to kick start the securitisation market, aiming to develop approaches to promote a better functioning securitisation market in the UK.
The European Central Bank is also keen to see a revival, while European Investment Bank experts say small- and medium-sized enterprises and young innovative firms now need to tap securitisation and venture capital to expand and prosper. - Reuters