⚠️Automatic translation pending review by an economist.
Ten years after the biggest banking and financial crisis in the history of developed countries, securitization, which was one of the causes of this slump, is gradually coming back into vogue in Europe. Securitization (« classic » rather than « synthetic ») is a financial innovation that allows financial securities to be created from a portfolio of loans and other types of receivables. Through risk diversification, securitization improves the rating of a set of securities and also gives banks the opportunity to remove receivables from their balance sheets. The use of securitization took off in the 2000s, alongside the granting of subprime loans by US banks. As a result, securities, sometimes of dubious quality, ended up in the hands of investors around the world. Greater regulation of securitization is therefore essential. To this end, an initiative was launched in January 2018 in Europe, requiring credit institutions, insurance companies, and pension funds to practice securitization that complies with STS (Simple, Transparent, and Standardized) criteria. A return to infographics is necessary to better understand how securitization works and its usefulness.
