“Harmonisation of the requirements for covered bonds across the EU will create security for investors and open up new opportunities”, said ECR German MEP Bernd Lucke today following the adoption of his report on a European covered bonds framework by the Parliament’s Economic and Monetary Affairs Committee.
Covered bonds are a financial product with a track-record of very low default rates, but this is the first time that clear and uniform criteria are being defined as to what exactly constitutes a covered bond in the EU. Mr. Lucke predicts we will soon see equal guarantees for investors across Europe, opening up new markets for covered bonds.
Speaking after the vote, Lucke said: “The fact that we were able to set consistent and clear criteria for covered bonds is a great success. With these high standards, we ensure the security of a financial product with a proven track-record. Investors can now rely on the security of these bonds throughout Europe.
“The new framework enables the development of markets for covered bonds even where they do not exist or are still relatively small. With clear rules, we are now strengthening competition and opening up new opportunities for investors. This ultimately benefits bank customers as well.”
“The proposed legislation on covered bonds is an important element in completing the Capital Markets Union.”
Looking ahead to future negotiations, Lucke said: “We will defend the high standards which we have proposed for covered bonds in the upcoming negotiations. Demands to accept inferior assets in the cover pool must be rejected. We have set a clear line to ensure that the quality of covered bonds is not impaired.”