Nadia ANTONIN
In decline since the financial crisis of 2008, European securitisation is the subject of a stimulus plan in Brussels aimed at easing the regulatory constraints on banks in order to free up capital and finance the real economy.
This desire for revival is reflected in particular by mobilising national authorities in favour of the development of the European securitisation market. In a joint response to the European Commission’s consultation, the French authorities thus support the sustainable development of the securitisation market as an indispensable tool for financing the European economy.
The expected effects of securitisation on the financing of the economy have also been analysed within the European Central Bank (ECB). For example, in a report entitled “Can synthetic securitisation support economic growth? ” published on 2 September 2026, Johanne Evrard, Wagner Eduardo Schuster, Fabian Wassmann and Michael Wedow recall that, in theory, securitisation can increase the supply of credit and help stimulate growth by freeing up capital and liquidity.
While synthetic securitisation can, in theory, strengthen banks’ lending capacity and free up regulatory capital, capital, empirical data indicate that its actual impact on real economic growth is very limited.
The mechanism of synthetic
securitization
Synthetic securitisation differs from traditional securitisation mainly by the nature of the transfer carried out, the treatment of assets on the balance sheet of the originator institution and the mechanisms used to transfer credit risk.
The book entitled ‘Multilingual Banking and Financial Terminology’ under the editorship of Nadia Antonin and in collaboration with the French Banking Organisation and Standardisation Committee (CFONB) defines synthetic securitisation as “the technique which, by combining traditional securitisation and credit derivatives, derivatives, to transfer credit risks without transferring assets”.
Thus, in the case of a synthetic securitisation: securitisation: 1) the receivables are not sold: they remain recorded on the balance sheet of the originator institution; 2) only the credit risk credit risk associated with these assets is transferred, in whole or in part, to investors or to other financial counterparties; 3) this transfer is effected via derivative financial instruments such as credit default swaps (CDS) default swaps/CDS) or financial guarantees.
Conversely, in the case of a traditional securitisation: securitisation: 1) the receivables are sold and legally transferred to a ad hoc entity, referred to as a special purpose vehicle (SPV); 2) they are removed from the balance sheet; 3) the SPV issues financial securities such as asset-backed securities/ABS.
What is the link between synthetic securitisation
securitisation and economic growth?
Synthetic securitisation can influence growth through several channels:
– increased capacity for financing: by transferring certain credit risks, the bank can free up some of its financial and prudential capacity;
– potential support for the granting of loans: the resources thus freed up can be used to finance new projects;
– a better distribution of risks: the various credit risks are distributed among different financial players, which can improve the financing of the economy.
The main takeaways from the
ECB report
Although synthetic securitisation allows banks to free up regulatory capital, the data show that institutions that use it only increase their lending to businesses. A 1% increase in synthetic securitisation issues only leads to a 0.02% increase in the growth of loans to to businesses. This effect is considered too small to have a significant macroeconomic impact.
Furthermore, instead of reinvesting the capital thus freed up into new loans to businesses, banks often allocate a significant portion of these funds to the distribution of dividends to their shareholders. A 1% increase in issues of synthetic securities corresponds to a 0.07% increase in dividend payments, dividends, i.e. an impact around three times greater than that observed on loans to businesses.
Finally, despite weak transmission to the real economy, the synthetic securitisation segment (which uses credit derivatives rather than the sale of physical assets) has experienced a meteoric rise, its volume having almost tripled since 2021 and exceeding that of traditional securitisations.
Financial risks associated with
synthetic securitization.
– Credit risks: Risks of default by the original borrowers on the underlying receivables.
– Liquidity and valuation valuation risks: Securitisation and, more specifically, synthetic securitisation played a central role in the spread and the amplification of the subprime crisis in 2007–2008.
In the 2000s, US banks banks granted mortgages to financially vulnerable people, vulnerable, while taking out a mortgage on the property being financed. These loans, which were riskier, were called subprime loans. These banks were able to sell these loans through securitisation transactions whose returns attracted international institutional investors. An increase in the key interest rate decided by the Fed, which rose from 1% to 5% between 2004 and 2006, led to a sharp increase in monthly mortgage payments, to the point that households found themselves unable to cope. In addition, the sale of numerous properties repossessed by banks and financial companies has contributed to the fall in property prices and, consequently, to significant losses for investors. The property crisis became a financial crisis.
In conclusion, the ECB report calls for a more nuanced view of the benefits of synthetic securitisation. Indeed, while synthetic securitisation can support growth by strengthening banks’ of banks to provide finance, its effects depend on the effective reallocation of the released capital to the real economy. The revival of the European securitisation market securitisation market cannot therefore be an end in itself. It must promote the provision of credit to the real economy while preserving financial stability.